Despatch of 2023 Annual Report
ASX Release: 20 October 2023
Quickstep Holdings Limited (ASX:QHL) (Company) attaches its 2023 Annual Report for despatch to its shareholders.
Authorised for release by the Board of Directors.
For further information please contact:
Mark Burgess - Managing Director
Quickstep Holdings Limited
Telephone: +61 2 9774 0300
E: mburgess@quickstep.com.au
Dexter Clarke - Chief Financial Officer
Quickstep Holdings Limited
Telephone: +61 2 9774 0300
E: dclarke@quickstep.com.au
Important Information – Forward looking statements:
This release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions.
Many factors could cause actual results, performance or achievements of the Company to be materially different from those expressed
or implied in this release including, amongst others, changes in general economic and business conditions, regulatory environment,
exchange rates, results of advertising and sales activities, competition, and the availability of resources. Should one or more of these
risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those
described in this release. Except as required by law, the Company assumes no obligation to update or correct the information in this
release. To the maximum extent permitted by law, the Company and its subsidiaries and officers do not make any representation or
warranty as to the likelihood of fulfilment of any forward-looking statements and disclaim responsibility and liability for any forward
looking statements or other information in this release.
Principal address: 361 Milperra Road
Bankstown Airport NSW 2200Fax: (02) 9771 0256
www.quickstep.com.au
Tel: (02) 9774 0300
ASX Code: QHL
Email: info@quickstep.com.au
GLOBAL
GROWTH
ANNUAL REPORT 2023
2023
HIGHLIGHTS
GLOBAL
GROWTH
Operational recovery is well progressed,
with strong H2 FY23 performance.
G R O U P R E V E N U E
I N F Y 2 3
$94.4m
9% FY22
$264m
IN NEW ORDERS AND ORDER
COMMITMENTS
AUGUST 2023
ENGINEERING COLLABORATION
with SoMAC CRC and Deakin University’s Institute
for Intelligent Systems Research and Innovation
(ISRII) to solve the high cost of production.
QUICKSTEP USA INC
signs exclusive manufacturing and engineering
integration agreement with TB2 LLC, Colorado
for the TB2 Pod Interface system.
2023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZEROQUICKSTEP ANNUAL REPORT 2023 01
01
02
04
06
08
10
12
14
21
29
76
78
MILESTONES AND ACHIEVEMENTS
JETSTAR
Restructured
relationship with
key customer
Jetstar Airways.
MOU WITH
ALLIANCE
AIRLINES
To secure formal
contracting
arrangements in
support of Alliance
Airlines’ growing
fleet of Embraer
E190 aircraft.
APPLIED
COMPOSITES
Booked extensive
drone contracts
from Australian and
international customers
and is emerging
as a leading tier 1
supplier in the market.
Carbonix, Swoop,
Dronamics, Spright.
US
EXPANSION
Quickstep announced
the selection of
Wichita, Kansas as
the location for its first
US engineering and
manufacturing facility.
CONTENTS
2023 HIGHLIGHTS
CHAIR’S REPORT
CEO & MANAGING DIRECTOR’S REPORT
GLOBAL GROW TH
TOWARD NE T ZERO
STRONG LE ADERSHIP
BOARD OF DIRECTORS
DIRECTOR’S REPORT
REMUNERATION REPORT
FINANCIAL REPORT
SHAREHOLDER INFORMATION
CORPORATE DIRECTORY
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY 02
CHAIR’S
REPORT
CHAIR’S
REPORT
The 2023 financial year was undoubtedly a year of challenges, resulting in a financial performance that was
below our expectations and our potential. However, it was also a year of considerable progress as Quickstep
(QHL) works to reinvent itself, laying the foundations for future growth with a stronger, diversified offering,
better suited to our changing world.
The future Quickstep will consist
of three businesses, all leveraging
composites technology (in which
Quickstep is a local and global innovator)
but addressing quite separate markets,
each with substantial growth prospects.
During the past year we have made
progress in securing new customers and
partners for both our Aftermarket and
Applied Composites (drones) businesses.
In this report, I will outline our strategy
and the progress that we are making
in delivering it which we expect will
drive strong shareholder returns over
the coming years. The CEO’s report will
cover some of the detailed activities and
outcomes achieved in FY2023.
Firstly, I would like to acknowledge the
ongoing strong safety performance of
Quickstep. Safety is a major focus of
any manufacturing business, and it is a
credit to the whole Quickstep team that
we have managed to continue to work
safely, notwithstanding the considerable
operational challenges experienced
over the past year.
The core and historical QHL business
is the Aerostructures business which
manufactures components for the
F-35 and C-130 aircraft. This is a stable
and profitable business, although, as
with most other businesses, we had
operational challenges in the first
nine months of FY23 as a result of
the pandemic (namely supply chain
issues alongside staff absenteeism
and talent shortages in a suddenly
hyper-competitive market).
We also had a significant failure of some
machinery which took longer to repair
than expected, again, influenced by
reduced international labour movement
stemming from challenges and
restrictions brought about by COVID. The
Aerostructures business has developed
deep expertise in the composites field
that is unique in Australia and globally
competitive and this kept us in demand
locally and internationally.
Where our strategy has taken us into new
territory and expansion is the deployment
of our composites expertise in two new
areas where we believe Quickstep has
a distinct competitive advantage. These
should deliver future growth in both
revenue and, more importantly, profit.
The first of these growth areas is the
Australian Aftermarket business based
in Tullamarine in Victoria. We acquired
Boeing’s in-house aftermarket business
in early 2021. This business provides a
unique MRO (maintenance, repair and
overhaul) capability in Australia. Much
of the work that is and will be done in
QHL’s Tullamarine facility, previously
had to be completed internationally.
The ability to do the work locally has a
myriad of advantages for local airlines,
not least of which is the substantial
reduction in greenhouse gas emissions
from not having to fly significant aircraft
components around the globe, particularly
as airlines begin to aggressively pursue
near-term and 2050 carbon targets. While
this business initially struggled to gain
traction, the outcomes from the review
conducted in the second half of FY23
have resulted in a substantial uplift in work
performed by the aftermarket business.
In addition, the strategic partnership
announced in September with
ST Engineering (a world leader in
commercial aircraft MRO) is a significant
development. We expect that the results
for the Aftermarket business over the
next couple of years will improve from
the loss reported in FY23.
The second growth business is the
Applied Composites business which is
firmly focused on becoming the world’s
largest tier one provider of complex
drone aircraft and components. While this
aspiration might sound lofty, Quickstep
has – over many years – developed and
refined unique technology which produces
aerospace composite products at a
significantly reduced cost over traditional
composite manufacturing techniques.
In particular, the Qure and AeroQureTM
proprietary processes and the Aeroline
production system give Quickstep a
substantial competitive advantage. Over
the past year, Quickstep has made good
progress winning new customers and
partners for this business and the impact
on profitability should be seen over the
coming years.
Given that the complex commercial
drone market will be heavily skewed to
the USA, it is imperative that Quickstep
has an engineering and manufacturing
facility in the USA to support customers
and shorten supply chains. As previously
announced, a site in Wichita Kansas
has been selected and the business is
now working on securing the funding to
enable the development of this US site
in the near term.
2023 HIGHLIGHTSCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZEROQUICKSTEP ANNUAL REPORT 2023 $94.4m
9% FY22
On behalf of the Board, I would like
to thank all employees of Quickstep,
the management team and our CEO
for maintaining their dedication and
enthusiasm throughout a difficult year.
I would also like to acknowledge the
support of our shareholders over
this period of transition.
I believe Quickstep is at a pivotal
moment in its development, as
we manage the transition from
the Aerostructures business
being the only avenue for growth
and profitability, to a much more
robust company with three major
businesses contributing to the
success and profitability of Quickstep.
Going through this transformation
is challenging and some teething
issues have resulted in a poor
financial outcome for FY23, with a
corresponding slump in our share
price. It is our expectation that we are
through the most painful part and that
the benefits of Quickstep’s growth
strategy will become increasingly
visible to all stakeholders, not least
our shareholders.
PATRICK LARGIER
Chair, Quickstep Group
03
“I believe Quickstep is at a pivotal
moment in its development, as we
manage the transition from the
Aerostructures business being the
only avenue for growth and profitability,
to a much more robust company with
three major businesses contributing
to the success and profitability
of Quickstep.”
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYGROUP REVENUE 04
CEO & MD
REPORT
CEO & MD
REPORT
Quickstep further secured its base order book during the 2023 financial year with a record $260M in
new contracts, contract renewals and order commitments across all business segments. Meanwhile, the
pivot to increasingly commercial, scalable, ‘best athlete wins’ markets that has been underway over the last
18 months is gathering pace.
In defence aerostructures not only have
we achieved a record order book, we
have also started to position ourselves
effectively to win new business in
the Guided Weapons and Explosive
Ordnance (GWEO) enterprise. This
legacy business has potential for
growth, which will be further enhanced
by establishing a presence on both
sides of the Pacific, capitalising on the
AUKUS alliance agreement.
Quickstep is emerging as a successful
tier one supplier in the commercial
drones segment, leveraging both
its deep engineering capability and
proprietary process technology. This
is then underpinned by equity stakes
and manufacturing agreements in
a number of promising start-ups in
Australia and the US.
The successful conclusion of the
Aftermarket strategic review and
major announcements with Alliance
Airlines and ST Engineering have
positioned that business for growth
over the next 12-36 months. Strong
customer demand for onshore
capability with shorter supply chains
represents a significant tailwind for
this business.
Quickstep enjoys great peer,
customer, and broader industry
recognition in Australia and the US
for the positions we are building in
high growth, higher margin segments.
Deep engineering and technology
capability is in our DNA, but we need
to now venture beyond Australia
to exploit this to its full potential.
Put simply, we are outgrowing the
Australian market.
Building a full-spectrum,
multi segment aerospace company
from an Australian base takes
significant time, effort and investment.
We acknowledge that contrary to
other investment environments, this
is a bold investment thesis in the
Australian listed investment space
and the value created can take
quite a while to be reflected in the
company’s valuation and share price.
Building strong businesses, which
create value over the long-term, is
key to success in our industry.
We will be working hard to ensure
that this proposition is recognised
by investors in Quickstep and that
it translates into the valuation of
the company.
The foundation of our growth plan is
predicated on strong differentiation
across our business including:
— The establishment of a US
footprint, as there are few,
companies like us in the US –
with broad and deep capability,
yet agile and innovative across
multiple segments.
— Our strong technology foundations
and a clear plan to leverage that
technical capability into high
growth, high margin markets,
across different geographies.
— Defence Aerostructures: the future
shape of our defence business
will be crafted in the US as well as
Australia. We will be one of very
few Australian companies, and
probably the only independent
aerospace one, that will offer deep
engineering, manufacturing and
sustainment capability on both
sides of the Pacific.
— Drones: we seek to grow this
segment, becoming the world’s
largest tier one provider of complex
drone aircraft and components.
Underpinned by deep engineering
capability and a completely
transformational production system,
Aeroline, - a fully automated system
offering very large reductions
in labour content, and therefore
cost versus traditional composite
manufacturing techniques. This is
advanced manufacturing befitting
the third revolution in aerospace
and has already been proven
through the F-35 flare housing
project and automation we have
proven in current drone production.
— Aftermarket: we expect to grow to
capture a high market share of the
regional MRO market in commercial
and defence, driven by reduced
costs, improved turn times and
lower emissions. With a network
of strong customer and partner
relationships, in a market that wants
the capability we offer onshore and
where we have no direct domestic
competitor of scale.
These growth dynamics are larger
and more profound than anything
the business has experienced
before. It requires different thinking,
a different risk appetite, a drive into
more dynamic markets overseas
and investment in a more dynamic
business to exploit those markets.
2023 HIGHLIGHTSCHAIR’S REPORTGLOBAL GROWTHTOWARD NET ZEROQUICKSTEP ANNUAL REPORT 2023 $264m
in new orders and order
commitments
The pivot we have been working
on for 18 months represents just
the beginning. We recognise that
shareholders have been very patient
and appreciate those that are with
us on the journey. Rest assured, the
future of this business is technology
driven aiming for high growth with
step change margin performance.
MARK BURGESS
CEO and Managing Director,
Quickstep Group
05
“These growth dynamics are larger and
more profound than anything the business
has experienced before. It requires different
thinking, a different risk appetite, a drive
into more dynamic markets overseas and
investment in a more dynamic business to
exploit those markets. ”
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYIN FY23 06
GLOBAL
GROWTH
GLOBAL
GROWTH
Quickstep’s business strategy is focused on global growth – growth derived from multiple segments in
multiple geographies. Over the last decade, the company has consistently exported more than 90% of
its revenue, making it a leading Australian aerospace exporter, driven largely by defence aerostructures
contracts with major US prime contractors.
The company has diversified its portfolio
with expansion beyond its traditional
aerostructures base. We now build
complex aerostructures, design and build
drones, and provide repair and overhaul
capability to aircraft operators. This will
be further augmented by expansion into
guided weapons and clean technology
applications. All leveraging our core
competency in complex carbon fibre
engineering and manufacturing. Hardware
is hard and we have a globally recognised
capability in this space.
We are developing a more balanced
portfolio with growth coming from
multiple segments. More revenue is being
generated in the domestic market from
the Aftermarket business (driven by the
trend toward onshore capability) and
the drones business (driven by domestic
demand from key customers). Both of
which offer enhanced margin opportunity
and diversification of revenue and
customer mix.
The announcement of our first US facility
will allow the company to service the
North American market from an onshore
facility, taking Aussie ‘smarts’ to the US.
This is of particular importance in the
drones market, where the US represents
the majority of global demand across both
commercial and military applications. It will
also position the company more effectively
to pursue defence opportunities, where
workload can be balanced between
US and Australian facilities, offering our
customers an attractive and flexible supply
chain capability.
DEFENCE
The carbon fibre addressable
market in the defence structures
sector is projected to reach
$3.6bn 1
MRO
The Oceania component
MRO market
$244m2
SPACE
The global Space structure
market is expected to reach
$1bn3
2023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTTOWARD NET ZEROQUICKSTEP ANNUAL REPORT 2023Source: 1. Quickstep Market Analysis, 2022; 2. Aviation Week 2023; 3. McKinsey 2023by 2025by 2030in 2023 07
CLEAN TECH
The global CleanTech addressable
market is expected to reach
$15bn 1
by 2030
UAV
The global commercial UAV
market is expected to reach
$15.5bn3
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYby 2030 08
TOWARD
NET ZERO
TOWARD
NET ZERO
PROJECT H2-350
Collaborating with Swinburne University’s
AIR Hub and NSW company Bralca 2.0,
Quickstep has integrated an “off-the-
shelf” hydrogen fuel system into a
UAS platform. Following 6 months
of addressing logistical, safety, and
technical challenges, we’ve successfully
incorporated the fuel cell powerplant
and hydrogen storage onto the aircraft.
Aerostructure design has been improved
to accommodate these advanced
powerplants. Ground testing is complete,
and we’re set to begin flight testing later
this year!
INTELLIGENT HYDROGEN
STORAGE SOLUTIONS
In 2022, Quickstep received $800K
in R&D funding from the NSW
Government’s Clean Technology
Innovation Program. We are excited to
have solidified a partnership with the
University of New South Wales to jointly
create specialized Type V hydrogen
storage tanks for Advanced Air Mobility
Aerostructures. The project is underway
and we hope will yield advanced
hydrogen storage tanks within the
next year.
ELECTRIFICATION
OF FLIGHT
— BROLGA UAS
Quickstep understands the rising demand
for versatile Uncrewed Aircraft Systems
(UAS) across diverse industries. Our
survey of end users such as Border Force,
Defence, Government, agriculture, and
real estate revealed a common need for
adaptable systems. To address this, we're
developing a modular and reconfigurable
UAS named Brolga. This platform aims
to break free from specific application
constraints, offering a customizable
platform for enhanced efficiency and
flexibility. With our expertise in aerospace
composites, we aim to revolutionize UAS
use across various sectors. Currently
in early design stages, we're on an
accelerated schedule to deliver an initial
all-electric prototype, with a full variant
planned for a hydrogen powerplant.
These developments will feed into the
wider electrification of flight strategy the
company is developing.
I N 2 0 2 2
$800K
Received in R&D funding from the
NSW Government’s Clean Technology
Innovation Program
2023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHQUICKSTEP ANNUAL REPORT 2023 09
CORPORATE
SUSTAINABILIT Y
PROGRAM
We are very proud to announce the
initiation of our Corporate Sustainability
Program as we strive to contribute to
a more sustainable world and create
long-term value for our shareholders. We
are working to establish sustainability
goals in collaboration with our employees,
customers, and key stakeholders.
Our Corporate Sustainability Program
encompasses a comprehensive set of
initiatives to minimise environmental
footprint, promote social development,
greatly improve efficiency, and cost
outcomes, and embrace ethical practices
throughout our value chain.
By integrating sustainability into our
corporate strategy, we position ourselves
to differentiate our offering and thrive in
an ever-evolving business landscape,
one which increasingly values improved
environmental and social outcomes.
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORYCOMPOSITE BRAIDING TECHNOLOGY RMIT collaboration to utilise their state-of-the-art composite braiding infrastructure to manufacture commercial UAS aerostructure, aiming to investigate the potential, viability, and advantages of braiding infrastructure, with the prospect of integrating it into Quickstep’s Aeroline.HYDROGEN POWERPLANT with Deakin University, to utilise their Hycel Technology Hub (one of Australia’s first facilities for safely testing, manufacturing, optimising and training in new hydrogen technologies), to develop and test Hydrogen Fuel Cell and Storage Systems. 10
STRONG
LEADERSHIP
The leadership team at Quickstep know that the best way to grow as an
organisation is to invest in their number one asset, their people.
DEMI STEFANOVA
Chief Operating Officer
DEXTER CLARKE
Chief Financial Officer
JOSH SCANLON
EGM Aerostructures
Quickstep has undergone
a significant transformation
over the past year, improving
operational capabilities and
driving efficiencies across
our business.
We have created dedicated
programs focused on enhancing
processes, reducing costs,
and eliminating failures.
Our Operational Excellence
Transformation Program (OPxP)
fostered collaboration and
effective execution of programs
to enhance equipment reliability,
processed and reduce cost.
Looking ahead, we will continue
to invest in our teams, provide
resources and support, and
pursue growth and innovation.
Joining the Quickstep team
at a challenging time for the
business also showed
what the business is
capable of under difficult
circumstances.
Like all businesses, we need
to get the basics right and I
am spending much of my time
with the whole team testing our
thinking and looking at new
ways to improve productivity and
profitability. By getting the basics
right, we earn the right to focus
on our aspirational objectives
and can then provide greater
value to our shareholders,
customers, and all stakeholders.
Quickstep is recognised as a
highly capable manufacturer
here in Australia and around
the world which is a testament
to highly committed team which
I am privileged to now be part
of. The sky really is the limit
for Quickstep.
Our position as a well-
respected part of the global
supply chain in defence and
commercial markets provides
the opportunity to expand our
focus, to utilise the wealth of
experience and knowledge
in our team and to apply this
focus to modern challenges.
Over the last 12 months the
Aerostructures business has
continued to show tremendous
resilience in the face of difficult
operating environments
pertaining to the global supply
chain challenges and Australia’s
recovery from Covid. Our
performance is underlined by
our core strength, our people.
Highly skilled, focused and
committed, their capability
serves us well today and they
will form the cornerstone of an
exciting future for the business.
LUKE PRESTON
Head of Technology
& Partnerships
I look forward to applying
my background in design
and manufacturing complex
automotive products, honed
from Ford and Tesla to
create new Advanced Air
Mobility solutions, designing
and manufacturing through
automation new air vehicles
that will need to be produced
at scale.
Quickstep’s ability to
manufacture aerospace
components at scale and
the ability to solve complex
manufacturing challenges
through its advanced
manufacturing engineering
talent will see us design our
own products; they will be easy
to manufacture, elegant and
low cost.
2023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZEROQUICKSTEP ANNUAL REPORT 2023 STRONG
LEADERSHIP
11
SARAH HART
Head of People & Culture
STEVE OSBORNE
VP Quickstep USA, Inc.
Looking forward, People &
Culture’s focus remains on
nurturing a workplace where
our diverse and talented
employees can thrive.
We are excited about the year
ahead and the upcoming goals
we have set, including launch
of Diversity Equity and Inclusion
program, payroll transformation
program, building a robust
talent pipeline, continuous
improvement of Employee
Engagement and creation of
a learning culture. All of which
align with our commitment
to innovation and inclusivity,
underpinned by technology
and innovation in all that we do.
The AAM sector provides us
an opportunity to show what
Quickstep is about; leading
the way in the design and
development of high-rate
manufacturing systems to
meet these new demands of
thousands of aircraft per year.
It supports all of our lines of
business from aerostructures
manufacturing to MRO and
supports our international market
expansion. This is something
that all our employees and
shareholders should be
genuinely excited about. I’m
very much looking forward to it!
TIM GENT
Head of Strategy & Business
Development, Aftermarket
I believe that Quickstep
will continue to excel in the
MRO sector.
Aftermarket will focus on
expanding our customer base
and strengthening relationships
with existing clients. Quickstep’s
expertise in composite
repairs and proprietary repair
technologies make us unique.
Strong partnerships with OEMs
and airlines give us access to
valuable insights and enable
us to provide comprehensive
MRO solutions.
BOARD OF DIRECTORSREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY 12
BOARD OF
DIRECTORS
PATRICK LARGIER
Chair
LEANNE HEYWOOD
Chair ARC, Non-Executive Director
When I was approached to join the Quickstep board in
late 2019, I was attracted by the growth prospects for
the company.
While the business has been knocked about by the COVID
pandemic, I am still of this opinion. I believe that over the past
18 months we have put in place many of the building blocks for
this growth in both revenue and profitability over the coming
years. As testament to this belief, over the past few years my
family has consistently acquired QHL shares with direct and
indirect holdings placing us as a Top 20 shareholder.
I joined the Quickstep board in February 2019 when the
company was forecasting a significant turnaround in net profit.
That turnaround was delivered, and despite the challenges
associated with COVID, the company continues to grow
and diversify. As Chair of Audit and Risk, I enjoy overseeing
Quickstep’s Audit and Risk efforts, led by a capable executive
team who can effectively manage the delicate balance between
innovation and growth while safeguarding the company’s
assets, reputation, and long-term sustainability in a dynamic
and challenging industry.
2023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZEROQUICKSTEP ANNUAL REPORT 2023 BOARD OF
DIRECTORS
13
LIS MANNES
Chair RND, Non-Executive Director
AVM KYM OSLEY (RETIRED)
Non-Executive Director
The leadership team at Quickstep know that the best way to
grow as an organisation is to invest in their number one asset,
their people.
I have been impressed by their focus on the development and
promotion of talented people, irrespective of their gender or
background. ‘Agile’ is becoming a way of thinking not just a way
of working, and ‘Smarter Solutions’ are creating more sustainable
solutions. An organisational culture built on commitment,
coordination and cadence is enabling great things to be
achieved in Aerospace.
I have been in and around the aerospace sector for many
decades and have seen Quickstep grow in just over 10 years
from a small startup to being a mature and highly respected
player in the Defence and aerospace sectors.
I think Quickstep is emerging from the pandemic well positioned
for growth into an expanding Defence and aerospace market.
STRONG LEADERSHIPREMUNERATION REPORTDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY 14
Directors’ Report
The Directors present their report on the consolidated entity consisting of Quickstep Holdings Limited and the entities
it controlled at the end of, or during, the year ended 30 June 2023. Throughout the report, the consolidated entity is
referred to as the “Group” or “Quickstep”.
Directors
The following persons were Directors of Quickstep Holdings Limited during the whole of the financial year and up to the
date of this report:
Mr. P Largier
Mr. M H Burgess
Mrs. L Heywood
Mrs. E Mannes
Air Vice Marshal K Osley (Ret’d)
Mr. P Largier was appointed Chairman on 31 August 2020 and continues in office at the date of this report.
Principal Activities
During the year the continuing principal activities of the Group consisted of:
production of parts for Northrop Grumman for the Joint Strike Fighter Project
production of C-130J wing flaps for Lockheed Martin
production of parts for the Joint Strike Fighter vertical tails for BAE Systems and Marand Precision Engineering
•
•
•
• manufacturing and development of parts using Qure Technology
• maintenance, repair and overhaul of aircraft
•
continued development of technologies for scaled volume production.
Review of Operations
Total Revenue for the year ended 30 June 2023 was $94.4 million (FY22: $86.7 million) representing an 8.9% increase
on the prior year. The revenue increase is attributable to strong H2 FY23 production volume in the Aerostructures
line-of-business along with modest year on year absolute growth in the Aftermarket and Applied Composites line-of-
businesses.
The full year Group performance was impacted by the continuation of operational challenges which began in the
second half of FY22, in particular, industry wide supply chain disruption and skilled labour shortages in the wake of the
pandemic, specific key equipment reliability issues (Aerostructures impact), abnormal employee restructuring costs
and Aftermarket goodwill impairment. In H2 FY23 operating conditions stabilised and the Group delivered revenue of
$49 million and a return to profitability in Q4 FY23.
The FY23 $9.7 million Gross Profit (FY22: $13.3 million) represents a $3.6 million or 27.2% decrease. The fall in gross
profit is largely attributable to inconsistent production volumes throughout the year for the reasons identified above
which leads to inefficiencies in labour and equipment utilisation.
The FY23 ($5.7) million Profit/(Loss) After Tax includes the unfavourable impact of $2.3 million for the goodwill
impairment related to the Aftermarket line-of-business, $0.5 million unfavourable impact of employee restructuring
costs and the favourable impact of a $0.4 million foreign controlled entity legal accrual writeback.
Total bank debt as at 30 June 2023 was $13.3 million (FY22: $9.8 million) representing an increase of $3.5 million. The
bank debt increase is attributable to working capital levels related to the operational challenges noted above.
Cash from operating activities of $1.9 million for FY23 was achieved through strong customer receipts and ongoing
cost and cashflow initiatives.
Quickstep Holdings Limited
2
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DIRECTORS’
REPORT
15
Directors’ Report
Material Risks
The material business risks faced by the Group that are likely to have an effect on the financial prospects of the Group
and how the Group manages these risks include:
-
-
-
-
-
Foreign exchange – the reliance on sales from key customers which are billed in US dollars and sourcing of raw
material product in US dollars, directly impacts both sales and operating profit. The Group has adopted a
Foreign Exchange Hedging Policy which is considered to be suitable to the business. The risk associated with
exchange rate fluctuation is expected to continue.
Supply chain – the absence of alternate suppliers in some cases and the ongoing disruption of some supply
chains impacted by the COVID-19 pandemic has the potential to disrupt production. Tight management of the
supply chain has largely mitigated disruptions to date however the risk remains high until global supply chains
normalise.
Equipment failure – an extended failure of critical equipment has the potential to disrupt production.
Preventative maintenance programmes, monitoring tools, critical spares stock and equipment supplier support
arrangements are in place to mitigate this risk.
Flooding – the area of Bankstown, where the Group’s Aerostructures line-of-business manufacturing site is
located, is susceptible to localised flooding from nearby tributaries. Whilst historical water egress on the site
itself has been minimal, employee access to site has been impacted for periods of time which has the potential
to disrupt production.
Revenue growth – the Group’s Aftermarket and Applied Composite lines-of-business are expected to be key
drivers of revenue and profit growth in future years. The likelihood of this growth materialising particularly for
the Aftermarket line-of-business depends on the volume of, and ongoing recovery in, commercial airline traffic.
Dividends
No dividends have been paid during the financial year. The Directors do not recommend that a dividend be paid in
respect of the financial year (2022: $ Nil).
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Events Since the end of the Financial Year
No matter or circumstance has arisen since 30 June 2023 that has significantly affected the Group’s operations, results
or state of affairs, or may do so in future years.
Shares under Options
There are Nil (2002 Nil) unissued ordinary shares of Quickstep Holdings Limited under option at the date of this report.
No options were granted during the year and since the end of the financial year.
Quickstep Holdings Limited
3
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
16
Directors’ Report
Information on Directors
The following information is current as at the date of this report
Mr. Patrick Largier
Independent Non-Executive Director - appointed 19 December 2019
Mr Largier is an experienced non-executive director and has over 30 years’ executive experience in the
oil, chemicals and industrial sectors in Australia, the UK and South Africa.
Prior to taking up non-executive director roles, he was Managing Director of Ludowici, an ASX-listed
global specialist mining services company with operations across five continents. Over five years he led
the company through a turnaround, followed by rapid international growth and the ultimate sale of the
company to the Danish group FLSmidth in 2012. He then became Managing Director of FLSmidth Pty
Limited for two years. Before this, Patrick spent 15 years in numerous business general manager roles at
ICI and Orica's Plastics and Chemicals Groups. His final role in the company was on Orica's Group
Executive team as General Manager - Strategy & Acquisitions. Before emigrating to Australia in 1992,
Patrick spent ten years with Shell in Cape Town and Shell International in London.
Since 2014 he has focussed his energies on non-executive director roles. He is currently a non-executive
director and chairman of several private and private equity companies across a range of industries.
Patrick has a Chemical Engineering degree (with honours) from the University of Cape Town and
completed the Advanced Management Program (AMP) at Harvard in 2004. He is also a Graduate of the
AICD.
Chair of the Board from 31 August 2020
NIL
Ordinary shares in Quickstep Holdings Limited
573,000
Mr. Mark H Burgess
CEO and Managing Director - appointed 18 May 2017
Mr. Burgess joined Quickstep in May 2017 bringing with him over 20 years’ experience in the global
aerospace and defence industry, where his successful delivery of profitable growth and complex projects
in advanced technology businesses has led to significant employer, customer and industry recognition.
Mr Burgess has held leadership roles of increasing responsibility across Europe, USA, the Middle East and
Asia Pacific.
After a long career with BAE Systems covering sales, contracts, project and general management he
joined Honeywell in 2013 as Vice President Honeywell Aerospace, Asia Pacific. During his four years at
Honeywell, he was responsible for driving sustained profitable growth across a defence, space and
commercial helicopter portfolio.
Mr. Burgess has extensive experience of governance and stakeholder management, working with public,
private and not-for-profit sectors. He has managed several successful acquisition and post acquisition
projects and has held numerous board positions on subsidiaries, private companies and international
joint ventures.
Mark holds a degree in Politics and Economics from the University of Hull and has completed several
post graduate studies in business and operations management.
Chief Executive Officer
Non-Executive Director Carbonic Boats Pty Ltd (trading as Carbonix)
Ordinary shares in Quickstep Holdings Limited
480,972
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Quickstep Holdings Limited
4
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
REPORT
17
Directors’ Report
Information on Directors
Mrs. Leanne Heywood
Independent Non-Executive Director - appointed 21 February 2019
Mrs Heywood joined the Quickstep board in February 2019 and brings experience as an ASX listed non-
executive director, Audit and Risk committee and Nominations and Remuneration committee chair along
with broad general management experience gained through an international career in the sales and
distribution, mining, rural, government and not-for-profit sectors.
Leanne has extensive international and domestic marketing experience and brings international
customer relationship management, stakeholder management (including governments and investment
partners) and team leadership experience in China, Japan, Mongolia, Singapore, South America, Europe
and India.
Leanne is an experienced leader of transformational change having led organisational restructuring,
disposals and acquisitions, including integration. She has strong skills across Marketing, Business
Analysis, Contracts, Procurement, Logistics, Accounting and Business Improvement along with an
advanced ability to facilitate complex negotiations.
Leanne holds an executive MBA from Melbourne Business School and a Bachelor of Business (majoring in
Accounting) from Charles Sturt University. She is a graduate of the AICD International Company Directors
Course and a Fellow of CPA Australia.
Chair of the Audit, Risk and Compliance Committee and member of the Remuneration, Nomination and
Diversity Committee.
Allkem Limited; Symbio Limited and Midway Limited
Ordinary shares in Quickstep Holdings Limited
19,523
Mrs. Elisabeth Mannes
Independent Non-Executive Director - appointed 22 August 2019
Mrs Mannes joined the Quickstep board in July 2019, she is a highly experienced C-Suite executive with
a 40-year career that has spanned both the fast-moving consumer and industrial goods industries. She
has international and domestic general and operations management experience and was most recently
Executive General Manager of CHEP Australia Limited, a wholly owned subsidiary of Brambles Limited
(ASX: BXB), retiring in January 2023. Lis brings global leadership skills and has a proven track record of
driving value by leading complex businesses through strategic, operational, and cultural challenges
within competitive commercial environments. She has led business growth, organisational restructuring,
disposals & acquisitions, and business integrations. Prior to joining CHEP she was Executive General
Manger of the Consumer and Industrial division of Pact Group Holdings (ASX: PGH), and before this she
was Operations and Business Development Director of Tip Top, a division of George Weston Foods (GWF)
- a wholly owned subsidiary of Associated British Foods (LSE: ABF).
Her skill set includes Business Strategy; Financial Management; Supply Chain Optimisation; People &
Culture; Customer & Operational Excellence; Risk Management; ESG/Sustainability. She was a founder
board member of the National Association of Women in Operations (NAWO).
Lis is a Chartered Engineer (CEng) and a Fellow of the UK Institution of Mechanical Engineers (FIMechE).
She holds an MBA, completed the AMP at INSEAD and is a Graduate of the AICD.
Chair of the Remuneration, Nomination and Diversity Committee and member of the Audit, Risk and
Compliance Committee.
NIL
Ordinary shares in Quickstep Holdings Limited – (held in spouse’s
name)
42,176
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Quickstep Holdings Limited
5
STRONG LEADERSHIPBOARD OF DIRECTORSREMUNERATION REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
18
Directors’ Report
Information on Directors
Air Vice Marshal Kym Osley (Ret’d)
Independent Non-Executive Director - appointed 11 June 2020
Air Vice-Marshal Osley joined the Quickstep board in June 2020 and has over 46 years of Defence and
aerospace experience including prior experience as the Program Manager of the Australian F-35 Joint
Strike Fighter Program. Kym retired in 2021 from his full-time position as a Managing Director in an
international consulting firm, working with Government and Defence clients to take up Board positions
and private consulting work. Kym continues to support Defence in his active Reserve role as an Air Vice-
Marshal. Kym has extensive international experience with Defence and aerospace industry gained
through various Defence-related appointments in the UK and the US, and through his previous work as
a Reservist officer promoting exports as a military specialist and leader in Team Defence Australia. He
was awarded a Defence Industry Service Commendation by the Minister for Defence in 2019 for leading
teams that have been supporting future Defence capability planning since 2016. Earlier in his military
career, Kym was an aviator who flew in F-111, Phantom and F-18 aircraft with the RAAF and USAF. He
was awarded a Conspicuous Service Cross in 1997 and made a Member of the Order of Australia in 2008
for services to Defence.
Kym is currently the Chair of the Australian Air Force Cadet Foundation, a NED with PWR Holdings, a
NED with Elbit Systems Australia and on the Strategic Advisory Board of a space-related company.
Kym is a graduate of the Harvard Business School (Advanced Management Program) and is a Fellow of
the Centre for Defence and Strategic Studies. He has a Master of Arts (International Relations), Master of
Defence Studies, a BSc (Physics) and a Graduate Diploma of Management Studies and is a Graduate of
the AICD.
Member of the Audit, Risk and Compliance Committee.
PWR Holdings Limited
Ordinary shares in Quickstep Holdings Limited
76,739
Ms. Jillian McGregor
Company Secretary - appointed 31 July 2020 – finished 7 September 2022
Ms. McGregor has approximately 20 years’ experience as a corporate lawyer and 9 years’ experience as a
company secretary of ASX listed companies. She has regularly advised companies and directors on
compliance with the Corporations Act 2001 (Cth), ASX listing rules and other corporate legal matters.
Ms. McGregor holds a Bachelor of Laws and Bachelor of Commerce (Merit) from the University of NSW and
holds a Graduate Diploma of Applied Corporate Governance from the Governance Institute of Australia
She is currently the Company Secretary of ASX listed and unlisted companies.
Ordinary shares in Quickstep Holdings Limited
Mr. Craig Roelofsz
Company Secretary - appointed 9 September 2022
Mr Roelofsz has approximately 22 years’ experience as a corporate and commercial lawyer. He has worked
closely with ASX listed companies in providing advice on compliance with the Corporations Act 2001 (Cth),
ASX listing rules and other corporate legal matters.
Mr Roelofsz holds the degrees of Batchelor of Arts, Batchelor of Laws and Master of Laws and is admitted
to practice as a legal practitioner in both South Africa and Australia.
Mr Roelofsz is currently the director of his own corporate and commercial law firm with offices in Brisbane,
Sydney and Melbourne.
Ordinary shares in Quickstep Holdings Limited
-
Experience and
expertise
Qualifications
Special
responsibilities
Other current
Directorships
Interests in shares
and options
Experience and
expertise
Qualifications
Other current
roles
Interests in shares
and options
Experience and
expertise
Qualifications
Other current
roles
Interests in shares
and options
Quickstep Holdings Limited
6
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
REPORT
19
Directors’ Report
Board Structure & Director Independence
The Company continually monitors the structure and performance of the Board to ensure it is of an appropriate size,
composition and skill to lead the Company and meet its current governance and strategic needs.
The Chair manages the Board to achieve responsive and effective business outcomes with highly committed Directors.
Quickstep has a Remuneration, Nomination and Diversity Committee (RN&D Committee), whose responsibilities include
the development and on-going review of Board competencies, structure, performance and renewal. Both the RN&D
Committee Charter and “Policy and Procedure for Selection and Appointment of Directors” are accessible from the
Company’s website as follows: www.quickstep.com.au
The Policy and Procedure for Selection and Appointment of Directors includes a matrix of skills that are considered
necessary within the non-executive Director group to facilitate an effective and efficient Board. The RN&D Committee
periodically reviews both this matrix and the Directors’ actual skills mix to ensure they satisfy the current and
immediately foreseeable needs of the Company.
The Board aims to maintain a varied level of tenure amongst its Directors, which is seen as essential for its effective
functioning given the significant growth and change experienced by Quickstep in recent years. This has resulted in both
an influx of fresh ideas and the retention of sufficient Quickstep specific understanding to optimise strategic and
operational changes. As the business evolves this is continually reviewed.
The Board is committed to a majority of its Directors being independent to ensure the Board acts in the best interests
of the entity itself, its security holders and stakeholders generally. Director independence is assessed on a regular basis,
and all Directors are required to advise the Board of any actual or potential conflicts of interest as they arise, with any
such conflicts tabled at Board meetings.
In assessing independence, the Board considers a number of factors which include, but are not limited to, the “Factors
relevant to assessing the independence of a Director” listed in Recommendation 2.3 of the Corporate Governance
Principles and Recommendations 3rd Edition established by the ASX Corporate Governance Council (‘the ASX Principles
and Recommendations”).
Directors’ Meetings
The numbers of meetings of the Company's board of Directors and of each board committee held during the financial
year ended 30 June 2023, and the numbers of meetings attended by each Director were:
Director
Board Meetings
Audit, Risk and Compliance
Committee Meetings
Remuneration, Nomination
and Diversity
Committee Meetings
HHeelldd
AAtttteennddeedd
HHeelldd
AAtttteennddeedd
HHeelldd
AAtttteennddeedd
Mr. P Largier
Mr. M H Burgess
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
18
18
18
18
18
18
18
18
18
18
-
-
7
7
7
3
5
7
7
7
-
-
4
4
-
-
4
4
4
-
Insurance of Officers and Indemnities
Except as indicated below, the Group has not otherwise, during or since the end of the financial year, indemnified or
agreed to indemnify an officer of the Group or of any related body corporate against a liability incurred as an officer.
Insurance
During the financial year, Quickstep Holdings Limited paid a premium in respect of a Directors’ and Officers’ liability
insurance policy, insuring the Directors of the Company, the Company Secretary and all executive officers of the
Quickstep Holdings Limited
7
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20
Directors’ Report
Company and Group against a liability incurred as a Director, Secretary or executive officer to the extent permitted by
the Corporations Act 2001.
The Directors have not included details of the nature of the liabilities covered or the premium paid in respect of the
Directors’ and Officers’ liability and legal expenses’ insurance contracts, as such disclosure is prohibited under the terms
of the contract.
Indemnities
The Group has indemnified the Directors (as named in this report) and all executive officers of the Group and of any
related body corporate against any liability incurred as a Director, Secretary or executive officer to the maximum extent
permitted by the Corporations Act 2001.
Auditor’s Independence Declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 69.
Rounding of Amounts
The Company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the “rounding off” of amounts
in the Directors’ report and financial statements. Amounts in the Directors’ report and financial statements have been
the nearest dollar.
rounded off
thousand dollars, or
the nearest
certain
cases,
to
to
in
Corporate Governance Statement
Quickstep’s Corporate Governance Statement can be found on the Company’s website.
This report is made in accordance with a resolution of Directors on 25 August 2023.
M H Burgess
Director
Sydney, New South Wales
Quickstep Holdings Limited
8
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DIRECTORS’
REPORT
REMUNERATION
REPORT
21
Remuneration Report – Audited
The Directors present the Quickstep Holdings Limited 2023 remuneration report, outlining key aspects of the Group’s
remuneration policy and framework, and remuneration awarded this year.
The report is structured as follows:
1.
2.
3.
4.
Principles of Compensation
Details of Remuneration
Share Based Compensation
Analysis of Bonuses included in Remuneration
1. Principles of Compensation
Key Management Personnel (KMP) comprise the Directors of the company and the senior leadership team. KMP have
authority and responsibility for planning, directing and controlling the activities of the Group.
The report includes details relating to:
Executive Director
Mr. M H Burgess
Non-Executive Directors
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
Chief Executive Officer and Managing Director
Chair of Board
Chair of Audit, Risk and Compliance Committee and Member of Remuneration,
Nomination and Diversity Committee
Chair of Remuneration, Nomination and Diversity Committee and Member of Audit,
Risk and Compliance Committee
Member of Audit, Risk and Compliance Committee
Other Key Management Personnel
Mr. S J Gaffney
Mr. D Clarke
Mrs. D Stefanova
Chief Financial Officer to 31 March 2023
Chief Financial Officer from 15 May 2023
Chief Operating Officer from 15 August 2022
The Board has established a Remuneration, Nomination and Diversity (RN&D) Committee which assists the Board in
formulating policies on and in determining:
•
The remuneration packages of executive directors, non-executive directors and other key management
personnel, and
Cash bonuses and equity-based incentive plans, including appropriate performance hurdles, total payments
proposed and plan eligibility criteria.
•
If necessary, the RN&D Committee obtains independent advice on the appropriateness of remuneration packages given
trends in comparable companies and in accordance with the objectives of the Group. Further information on the role of
the committee is contained in the charter available on the Company’s website.
Quickstep has an Executive Remuneration Policy and a Non Executive Director’s Remuneration Policy. These are
available on the Company’s website.
Compensation levels for KMP of the Group are competitively set to attract and retain appropriately qualified and
experienced directors and executives. The remuneration structures are designed to reward the achievement of strategic
objectives and achieve the broader outcome of value creation for shareholders. Compensation packages include a mix
of fixed compensation, short-term cash incentives and equity-based incentives.
Shares, options or rights may only be issued to Directors subject to approval by shareholders in a general meeting.
Quickstep Holdings Limited
9
STRONG LEADERSHIPBOARD OF DIRECTORSFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
22
Remuneration Report – Audited
1. Principles of Compensation
The Group does not have any scheme relating to retirement benefits for its KMP other than superannuation
contributions defined under its statutory obligations.
The Company’s policy is to provide executives with a competitive fixed compensation comparable to the median paid
by like sized companies undertaking similar work and offers additional short and long term incentives to allow the
executive to achieve top quartile compensation, if all performance hurdles are met. All incentives are capped.
The Company’s policy is to provide non-executive Directors with a fixed fee comparable to the median of that paid by
similar sized ASX listed companies operating in similar fields. Non-executive Directors are not eligible for participation in
any of the Company’s incentive schemes.
Fixed compensation
Fixed compensation consists of base compensation, as well as statutory employer contributions to superannuation.
Compensation levels are reviewed annually through a process that considers current labour market rates, the individual's
contribution and overall performance of the Group. Compensation is also reviewed in the event of promotion or
significant change in responsibilities.
Performance linked compensation
Performance linked compensation includes both short and long term incentives and is designed to reward key
management personnel, excluding non-executive Directors, for meeting or exceeding the Company's business and their
personal objectives. Each individual’s performance linked compensation is capped as a percentage uplift of fixed
compensation. Other than as disclosed in this report, there have been no performance-linked payments made by the
Group to key management personnel.
Short Term Incentive
KMP receive short-term incentives (STI) in cash on achievement of key performance indicators (KPI). Each year, the RN&D
Committee considers the appropriate KPIs and associated targets to align individual rewards to the Group’s
performance. These targets include measures related to the annual performance of the Group and specific measures
related to the activities of individual KMPs.
In FY23, a suite of Corporate KPIs were used, including two financial KPIs (weighting 40%), a KPI relating to safety
(weighting 15%) and two growth focused KPIs (weighting 45%). The weighting of corporate KPIs used in the
determination of an executive’s STI is 70% for KMP excluding the Chief Executive Officer and 100% for the Chief Executive
Officer. The remaining 30% of KMP STI is determined by performance against personal KPIs which are aligned to the
delivery of Quickstep’s strategic plan.
The RN&D Committee is responsible for assessing whether the Corporate KPIs have been achieved and meet the criteria
set out at the beginning of the year. Each year threshold metrics are determined, with no STI payable to any executive
if these are not achieved. In FY23 each KPI had its own threshold/hurdle, target and stretch KPI.
Actual performance is then assessed against the threshold outcome, the target outcome and the stretch outcome.
Where performance falls below the threshold outcome, no payment is generally made against that KPI and where
performance exceeds the stretch outcome the maximum stretch is payable. Where performance falls between threshold
and target or target and stretch outcomes, an appropriate proportion of the KPI is payable. When the threshold target
is achieved, 33% of the weighting for the KPI is payable; when target is met, 66% of the weighting for the KPI is payable.
When threshold, target and stretch outcomes are achieved 100% of the weighting for the KPI is payable.
In FY23, Quickstep achieved an overall result of 10% out of a potential of 100%, against the corporate KPIs. The threshold
outcome was not reached for the two financial KPI’s and the two growth KPIs (with no STI payable). The target outcome
was achieved for the Safety KPI.
After reviewing the overall achievement of KPIs based on the above process, and with further consideration given to
overall financial performance, the RN&D Committee has recommended that no STI is payable to KMP for FY23.
Quickstep Holdings Limited
10
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
REMUNERATION
REPORT
23
Remuneration Report – Audited
1. Principles of Compensation
Long Term Incentive - Quickstep Incentive Rights Plan (IRP)
In November 2013 the Company established the Quickstep Incentive Rights Plan (IRP). The IRP was designed to facilitate
the Company moving towards best practice remuneration structures for executives and offers under the IRP have been
made to a number of executives since its introduction. The terms of the FY23 IRP for CEO and Managing Director were
approved by shareholders at the 2022 AGM on 16 November 2022 and the IRP terms for the management were
approved on 19 December 2022.
The IRP authorises the granting of Rights to executives of the Company, in the form of Performance Rights (PRs) and/ or
Deferred Rights (DRs) and/or Restricted Rights - (RRs) (together, Rights). These Rights represent an entitlement on
vesting to fully paid ordinary shares in the issued capital of the Company (Shares) with the total value of Shares being
equal to the value of vested Rights (number of vested Rights x market value of a Share). The value of the vested Rights
may be settled in cash, Shares or a combination of cash and shares as determined the Board. PRs may vest if Performance
Conditions are satisfied. DRs may vest if service conditions are satisfied. There were no RRs or DRs granted in FY23.
The Board has the discretion to set the terms and conditions on which it will offer PRs under the IRP, including the
performance conditions and modification of the terms and conditions as appropriate to ensuring the IRP operates as
intended. All PRs offered will be subject to performance conditions which are intended to be challenging.
The PRs awarded during FY23 are subject to a performance condition based on achieving a relative Total Shareholder
Return (TSR) equivalent to or in excess of the ASX Small Ordinaries Index (XSO) over the measurement period. The XSO
is an index of total shareholder return achieved by ASX listed small cap companies which combines both share price
movement and dividends paid during the measurement period (assuming that they are reinvested into shares). As a
general rule, Quickstep uses a measurement period of either three (3) or five (5) years with an anniversary date of 1
October each year.
For vesting to occur the Company's TSR (share price movement plus dividends) over the measurement period must be
positive (i.e., if shareholders have not gained then PRs will not vest) relative to the XSO. If the XSO movement is negative
over the measurement period then vesting, if any, will be at the discretion of the Board (i.e., only applies if the Company
has outperformed a general fall in the small cap market by protecting against a similar fall in the Company's share price).
If the Company's TSR is positive and the movement in the XSO is also positive, then the following vesting scales will
apply:
Performance Level
Below Threshold
Threshold
Target
Stretch and Above
Company’s TSR Relative to XSO Movement of the
Measurement Period
< Increase in the XSO
= Increase in the XSO
> 100% of XSO increase & < 110% of XSO increase
110% of XSO increase
> 110% of XSO increase & < 120% of XSO increase
120% of XSO increase
Vesting %
0%
25%
Pro-rata
50%
Pro-rata
100%
For PRs issued to executives during FY23, testing of the TSR hurdle will occur on the third or fifth anniversary as applicable
of the commencement of the measurement period (“Test Date”). Any PRs granted will lapse if they do not vest at or
before the Test Date.
The Board has discretion to vary the level of vesting if circumstances during the measurement period warrant a different
level of vesting or to bring forward vesting if such action is appropriate in the circumstances.
Quickstep Holdings Limited
11
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24
Remuneration Report – Audited
1. Principles of Compensation
Long Term Incentive - Quickstep Incentive Rights Plan (IRP)
The IRP contains provisions concerning the treatment of vested and unvested rights in the event that a participant ceases
employment. Unless the Board determines otherwise, if a participant ceases employment in other than special
circumstances (death, total and permanent disablement, retrenchment, redundancy, permanent retirement from full-
time work with the consent of the Board or other circumstances determined by the Board), all unvested rights held by
the participant will lapse.
Unless the Board determines otherwise, if a participant ceases employment under special circumstances, rights that
were granted to the participant during the financial year in which the termination occurred will be lapsed in the same
proportion as the remainder of the financial year bears to the full year. All remaining rights for which performance
conditions have not been satisfied as at the date of cessation of employment will then remain "on foot", subject to the
original performance conditions. If the rights vest following cessation of employment and the value of the Shares is lower
at the vesting date than at the date of cessation of employment, then the value of the vested rights will be paid in cash
unless otherwise determined by the Board. This provision aims to align the value that is taxed with the value that may
be realised from the sale of Shares.
Non-Executive Directors’ Fees
Remuneration for all non-executive directors was approved at a board meeting on 13 July 2022 and remained unchanged
in FY23. The table below indicates the maximum annual fees based on Directors’ responsibilities at the date of this
report. Non-executive directors do not receive performance related compensation.
Non-Executive Directors
Director Fees p.a.
Committee Fees p.a.
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
$145,000
$70,000
$70,000
$70,000
n/a
$20,000
$19,000
$7,000
Consequences of Performance on Shareholder Wealth
In considering the Group’s performance and benefits for shareholder wealth, the RN&D committee gives regard to the
following indices in respect of the current financial year and the previous four financial years.
2023
2022
2021
2020
2019
PPrrooffiitt // ((lloossss)) aattttrriibbuuttaabbllee ttoo
oowwnneerrss ooff tthhee ccoommppaannyy (($$000000))
DDiivviiddeennddss ppaaiidd
RReevveennuuee (($$000000))
CChhaannggee iinn sshhaarree pprriiccee
RReettuurrnn oonn ccaappiittaall eemmppllooyyeedd
(5,709)
$nil
94,379
(33.8%)
(27.9%)
786
$nil
86,675
(28.8%)
10.5%
(271)
$nil
85,097
(38%)
0.5%
3,891
$nil
82,252
(3.4%)
24.7%
2,693
$nil
73,275
13.0%
18.4%
Return on capital employed is calculated as profit / (loss) before interest and tax (EBIT) divided by total assets, excluding
deferred tax asset, less liabilities.
Quickstep Holdings Limited
12
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
REMUNERATION
REPORT
25
Remuneration Report – Audited
1. Principles of Compensation
Service Agreements
Name
Initial
Agreement date
Revised
Agreement
Date
Duration
Notice
period
Termination benefits
Mr. M H Burgess
8 May 2017
18 November
2021
Open
Mrs. D Stefanova
7 March 2022
15 August
2022(3)
Open
6 months 12 months annual TFR; and
pro-rated annual bonus (at
Board's discretion). If due to
change of control, 100% of
annual TFR is paid
immediately plus pro-rated
annual bonus
3 months 3 months annual TFR and
pro-rated annual bonus (at
Board's discretion).
Mr. D F Clarke
15 May 2023
-
Open
3 months 3 months annual TFR and
30
pro-rated annual bonus (at
Board's discretion).
STI cap
as a % of
Base
Salary (1)
LTI cap
as a % of
Base Salary
(2)
30
70
30
-
-
(1) Short Term Incentive (STI) is determined on performance against KPIs set and reviewed by the RN&D Committee
or the Board as appropriate. The STI cap refers to the maximum amount payable in cash, as a percentage of Base
Salary. The KPIs include metrics relating to financial objectives, safety and growth.
(2) Long Term Incentive (LTI) is determined on the Group's performance against relative Total Shareholder Return and
is tested at the end of the measurement period (1 October 2025). The LTI cap refers to the maximum amount
payable in shares as a percentage of Base Salary. This is the measure currently used in the IRP applicable to FY23.
(3) KMP from August 2022
Quickstep Holdings Limited
13
STRONG LEADERSHIPBOARD OF DIRECTORSDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
26
Remuneration Report – Audited
2. Details of Remuneration
The following tables detail the remuneration received by KMP of the Group for the current and previous financial year.
Name
Salary / Fees
STI (2)
SGC
Termination
LTI Rights (1)
Total
% of
remuneration
performance
related
Executive Directors
Mr. M H Burgess
Non-Executive Directors
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
Other KMPs
Mr. S J Gaffney (4)
Mrs. D Stefanova
Mr. D F Clarke (5)
Executive Directors
Mr. M H Burgess
Non-Executive Directors
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
Other KMPs
Mr. A J Tilley (4)
Mr. S J Gaffney (4)
483,567
145,000
90,000
80,540
77,000
212,698
266,432
43,294
25,149
-
-
8,460
-
16,205
25,428
4,546
-
-
-
-
-
-
-
2022
483,567
71,955
29,765
139,384
86,411
76,010
71,311
96,776
175,886
-
-
-
-
20,232
-
-
-
7,601
951
7,856
16,205
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
186,973
695,689
26.9%
-
-
-
-
(3,815)
-
-
145,000
90,000
89,000
77,000
225,088
291,861
47,840
-
-
-
-
-
-
-
160,287
745,574
31.1%
-
-
-
-
139,384
86,411
83,611
72,262
(10,271)
3,815
114,593
195,906
-
-
-
-
-
8.7%
1.9%
(1)
(2)
(3)
(4)
(5)
LTI rights include the accounting expense attributable to the current year under the IRP.
The FY23 Bonus is Nil.
There are no related party transactions between the Group and the KMP apart from compensation in the form
of annual remuneration.
Following the resignation of Mr A J Tilly, Mr. S J Gaffney commenced employment on 25 October 2021 and
assumed the role of Chief Financial Officer on 27 October 2021, there is no STI payable for FY23. (resigned 31
March 2023).
Mr D Clarke commence employment on 15 May 2023, no STI is payable for FY23.
Quickstep Holdings Limited
14
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
REMUNERATION
REPORT
27
Remuneration Report – Audited
3. Share Based Compensation
Long term Incentive - Quickstep Incentive Rights Plan (IRP)
At 30 June 2023 executives have accrued performance rights pursuant to the IRP. Movements in IRP rights during the
year are set out below:
KMP
Mr. M H Burgess
Mr. M H Burgess
Mr. M H Burgess
Mr. M H Burgess
Mr. M H Burgess
Mr. M H Burgess
Mr. S J Gaffney
Mr. S J Gaffney
Tranche
Refer
Note
FY18
FY19
FY20
FY21
FY22
FY23
FY22
FY23
Grant Date
1/12/2017
1/09/2018
1/09/2019
15/01/2021
18/11/2021
1/1/2023
16/12/2021
1/1/2023
FV per
right at
grant
date (b)
$0.690
$0.680
$0.680
$0.429
$0.320
$0.390
$0.270
$0.390
First Testing
Date
31/08/2020
31/08/2021
31/08/2022
31/08/2023
1/09/2024
31/08/2025
Balance at
30-Jun-
2022
Number
Granted
during the
year (a)
Number
247,524
284,651
214,042
308,642
668,967
-
-
-
-
-
-
775,658
Issued or
lapsed
during the
year
Number
(247,524)
-
-
-
-
-
1/09/2024
103,717
-
(103,717)
31/08/2025
-
176,282
(176,282)
Balance at
30-Jun-
2023
Number
Fair value at
grant date and
maximum yet
to vest
$
Cum
vesting
level
-
284,651
214,042
308,642
668,967
775,658
-
-
-
$193,562
$145,548
$132,407
$214,128
$302,507
-
-
0%
0%
0%
0%
0%
0%
0%
0%
(a) The fair value of rights granted in the year is $371,257 (2022: $233,397). The total value of the rights is allocated
to remuneration over the vesting period.
Modification of terms of equity-settled share-based payment transactions
No terms of equity-settled share-based payment transactions (including rights granted as compensation to a key
management person) have been altered or modified by the issuing entity during the reporting period or the prior period.
Movements in ordinary shares
The movement during the reporting period in the number of ordinary shares in the Company held, directly, indirectly
or beneficially, by each key management person, including their related parties, is as follows:
KMP
Mr. P Largier
Mrs. L Heywood
Mrs. E Mannes
AVM K Osley (Ret’d)
Mr. M H Burgess
Mr. S J Gaffney^
Mr D F Clarke
Ms D Stefanova
Shares Held at
1 July 2022
Number
Consolidation of
Shares during the
Year
Number
Received on
exercise of
options
Number
Other
changes (*)
Number
Held at 30 June
2023
Number
323,000
19,523
42,176
55,000
420,972
20,000
-
-
-
-
-
-
-
-
-
-
250,000
-
-
21,739
60,000
-
41,640
-
573,000
19,523
42,176
76,739
480,972
-
41,640
-
(*) Other changes represent shares that were purchased or sold during the year.
(^) Mr. S J Gaffney ceased employment during the year, hence, the closing balance is not tracked.
Quickstep Holdings Limited
15
STRONG LEADERSHIPBOARD OF DIRECTORSDIRECTORS’ REPORTFINANCIAL REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
28
Remuneration Report – Audited
4. Analysis of Bonuses included in Remuneration
Details of the short-term incentives awarded in cash as remuneration to each Key Management Personnel (KMP) of the
Company and each of the named other key management personnel of the Group are detailed below:
KMP
EExxeeccuuttiivvee DDiirreeccttoorr
Mr. M H Burgess
OOtthheerr KKMMPP
Mr D F Clarke
Ms D Stefanova
Included in
remuneration (1)
% vested in
year
% lapsed in
year
-
-
-
-
-
-
100%
100%
100%
(1)
No STI is payable for FY23 as the financial metric threshold was not achieved.
During FY21 the RN&D committee undertook a market benchmarking study of Senior Executive Remuneration. The work
was undertaken by Egan Associates, one of Australia’s leading independent advisers to Boards and Board Remuneration
Committee Chairs for a total cost of $40,000, and included a declaration by them, that the recommendations had been
made free from undue influence by KMP, to whom the recommendations related. The resultant report which was
discussed and considered by the RN&D committee and the Board, presented data, findings and recommendations in
relation to the market competitiveness of Quickstep’s remuneration practices for its Chief Executive Officer, Senior
Executives and Non-Executive directors. The structure of the current executive STI and LTI plans for FY23 are based on
the recommendations of this report.
Quickstep Holdings Limited
16
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
REMUNERATION
REPORT
FINANCIAL
REPORT
29
Financial Statements
Contents
Financial statements
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
A. About this Report
B. Business Performance
B.1 Revenue and other income
B.2 Segment Reporting
B.3 Profit per Share
B.4 Corporate and Administrative expenses
B.5 Notes to Statement of Cash Flows
B.6 Income Tax Benefit
C. Capital and Financial Risk Management
C.1 Loans and Borrowings
C.2 Leases
C.3 Finance Income and Finance Expenses
C.4 Financial Instruments
C.5 Financial Risk Management
C.6 Capital and Reserves
C.7 Capital and Other Commitments
C.8 Provisions
D. Operating Assets and Liabilities
D.1 Trade and Other Receivables
D.2 Inventories
D.3 Contract Assets
D.4 Property, Plant and Equipment and Software
D.5 Investment
D.6 Goodwill
E. Employee Benefits
E.1 Employee Benefit Obligations
E.2 Employee Benefit Expense
E.3 Related Party Transactions
E.4 Quickstep Incentive Rights Plan (IRP)
E.5 Equity Settled Short Term Incentive
F. Other Disclosures
F.1 Group Entities
F.2 Parent Entity Financial Information
F.3 Deed of Cross Guarantee
F.4 Auditors’ Remuneration
F.6 Subsequent Events
F.7 New Accounting Standards Not Yet Adopted
Directors’ Declaration
Lead Auditor’s Independence Declaration
Independent Auditor’s Report to the Members
Page
18
19
20
21
22
27
27
28
29
29
30
33
34
36
36
37
41
42
42
43
44
44
45
47
48
49
49
50
51
52
53
53
54
55
55
55
56
57
58
Quickstep Holdings Limited
17
STRONG LEADERSHIPBOARD OF DIRECTORSDIRECTORS’ REPORTSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
30
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
for the year ended 30 June 2023
Revenue
Cost of sales of goods
Gross profit
Other income
Research and development expenses
Business development expenses
Corporate and administrative expenses
Impairment expense
Profit/(Loss) from operating activities
Finance income
Finance expenses
Net finance costs
Profit / (loss) before income tax
Income tax benefit / (expense)
Profit / (loss) for the year
Other comprehensive income / (loss) net of income tax
Item that may be reclassified to profit or loss
Cash flow hedges
Exchange difference on translation of a foreign operation
Other comprehensive income / (loss) for the period, net of income tax
Total comprehensive income/(loss) for the year
Profit per share:
Basic profit / (loss) per share
Diluted profit/ (loss) per share
Notes
2023
$000
2022
$000
B.1
B.4
D.6
C.3
B.6
B.3
B.3
94,379
(84,716)
9,663
86,675
(73,411)
13,264
111
419
(908)
(1,244)
(8,595)
(2,287)
(3,260)
39
(2,966)
(2,927)
(6,188)
478
(5,709)
492
(193)
299
(5,410)
Cents
(7.96)
(7.96)
(1,318)
(1,515)
(9,033)
-
1,817
45
(2,027)
(1,982)
(165)
951
786
(575)
73
(502)
284
Cents
1.10
1.08
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
Quickstep Holdings Limited
18
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
31
Consolidated Balance Sheet
as at 30 June 2023
e she
ASSETS
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Prepayments and other assets
Inventories
Contract assets
Total current assets
Non-current assets
Property, plant and equipment and software
Right-of-use asset
Goodwill
Investments
Deferred tax asset
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Financial instruments
Loans and borrowings
Contract Liabilities
Lease liabilities
Employee benefit obligations
Total current liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Employee benefit obligations
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Share capital
Reserves
Accumulated losses
Total equity
Notes
2023
$000
2022
$000
B.5
C.5
D.1
D.2
D.3
D.4
C.2
D.6
D.5
B.6
C.8
C.4
C.1
D.3
C.2
E.1
C.1
C.2
C.8
E.1
C.6
5,611
-
12,297
1,715
12,902
11,158
43,683
11,819
13,649
-
3,044
5,530
34,042
77,725
3,021
891
9,043
1,639
14,910
10,294
39,798
13,999
15,551
2,287
3,044
5,052
39,933
79,731
13,489
19,393
-
101
1,200
8,868
1,856
2,046
-
593
2,564
1,500
1,628
1,990
27,560
27,668
12,100
15,697
3,448
1,702
32,947
60,507
17,218
7,282
17,443
3,448
1,515
29,688
57,356
22,375
120,785
6,683
120,785
6,131
(110,250)
(104,541)
17,218
22,375
The consolidated balance sheet should be read in conjunction with the accompanying notes.
Quickstep Holdings Limited
19
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
32
Consolidated Statement of Changes in Equity
for the year ended 30 June 2023
2023
Balance at 1 July 2022
Profit / (loss) for the year
Other comprehensive (loss)
Foreign currency translation difference
for foreign operations
Effective portion of changes in fair
value of cash flow hedges
Total comprehensive income/ (loss)
for the year
Transactions with owners of the
company:
Share based payments expenses
2022
Balance at 1 July 2021
Profit / (loss) for the year
Other comprehensive (loss)
Foreign currency translation difference
for foreign operations
Effective portion of changes in fair
value of cash flow hedges
Total comprehensive income/ (loss)
for the year
Transactions with owners of the
company:
Share based payments expenses
Share
capital
$000
Translation
reserve
$000
Cash flow
hedges
reserve
$000
Share
based
payments
$000
Accumulated
losses
$000
Total
equity
$000
120,785
(174)
(594)
6,899
(104,541)
22,375
-
-
-
-
-
-
(193)
-
(193)
-
-
-
492
492
-
-
-
-
(5,709)
(5,709)
-
-
(193)
492
(5,709)
(5,410)
-
(102)
253
7,152
-
253
(110,250)
17,218
120,785
(247)
(19)
6,733
(105,327)
21,925
-
-
-
-
-
-
73
-
73
-
-
-
(575)
(575)
-
-
-
-
-
786
786
-
-
73
(575)
786
284
166
6,899
-
166
(104,541)
22,375
Balance at 30 June 2023
120,785
(367)
Balance at 30 June 2022
120,785
(174)
(594)
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Quickstep Holdings Limited
20
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
33
Consolidated Statement of Cash Flows
for the year ended 30 June 2023
Cash flows from operating activities
Cash receipts in course of operations
Interest received
Interest paid
Other income
Cash payments in the course of operations
Net cash from operating activities
Cash flows from investing activities
Notes
2023
$000
2022
$000
101,062
87,958
39
(939)
-
(98,255)
1,907
45
(817)
318
(84,169)
3,335
B.5
Acquisition costs of plant and equipment and intangible assets
(890)
(1,861)
Disposal of plant and equipment and intangible assets
Proceeds from government grants for capital works
Investments in Carbonix & Swoop Aero
Receipts/(payment) for term deposit
Net cash (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of lease liabilities
Payment of borrowing costs
Net cash (used in) / from financing activities
Net (decrease) /increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
10
482
-
891
493
18,600
(15,146)
(2,790)
(47)
617
3,018
3,021
(429)
Cash and cash equivalents at end of period
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
5,611
-
104
(1,500)
-
(3,257)
6,715
(4,537)
(1,308)
-
870
948
2,353
(280)
3,021
Quickstep Holdings Limited
21
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
34
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
A. About this Report
Introduction
This is the financial report of Quickstep Holdings Limited (the “Company”) and its controlled entities (the
“Group”).
The Company is domiciled in Australia and the Group is a for-profit entity. The Group is at the forefront of
advanced composites manufacturing and technology development and is the largest independent aerospace-
grade advanced composite manufacturer in Australia, currently partnering with some of the world’s largest
aerospace/defence organisations.
Further the Company offers extensive maintenance, repair and overhaul services (MRO) across a wide range of
composite, bonded and conventional metal aircraft structures to defence, government and commercial aircraft
operators.
Materiality
Information is only included in the financial report to the extent that it has been considered material and
relevant to the understanding of the financial statements. Factors that influence if a disclosure is material and
relevant, include whether:
•
•
•
•
•
the dollar amount is significant in size (quantitative factor)
the dollar amount is significant by nature (qualitative factor)
the Group’s results cannot be understood without the specific disclosure (qualitative factor)
it is critical to allow a user to understand the impact of significant changes in the Group’s business during
the period; and
it relates to an aspect of the Group’s operations that is important to its future performance.
Statement of Compliance
These general-purpose financial statements have been prepared in accordance with the Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act
2001. The consolidated financial statements of the Group also comply with the International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
The consolidated financial statements were authorised for issue by the Board of Directors on 25 August 2023.
Basis of Preparation
The financial statements have been prepared on the historical cost basis. These consolidated financial
statements are presented in Australian dollars, which is the Parent’s functional currency.
Rounding of Amounts
The Company is of a kind referred to in Class Order 2016/191 issued by the Australian Securities and Investments
Commission, relating to the “rounding off” of amounts in the financial statements and Directors’ report.
Amounts in the financial statements and Directors’ report have therefore been rounded off to the nearest
thousand dollars, or in certain cases, to the nearest dollar.
Quickstep Holdings Limited
22
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
REPORT
REMUNERATION
REPORT
FINANCIAL
REPORT
35
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
A. About this Report
Accounting Estimates and Judgements
The preparation of financial statements in conformity with AASBs requires management to make judgements,
estimates and assumptions about future events.
Information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies are described below:
Going concern
The financial statements have been prepared on the going concern basis which contemplates the continuity of
normal business activities and the realisation of assets and discharge of liabilities in the normal course of
business.
The Group has incurred a loss after tax for the year ended 30 June 2023 of $5,709,000 (30 June 2022 profit
$786,000). The Group has net assets of $17,218,000 (30 June 2022 $22,375,000) and net current assets of
$16,123,000 (30 June 2022 $12,130,000). Current loans and borrowings are $3,056,000 (including lease
liabilities of $1,856,000) compared to 30 June 2022 $4,192,000. Operating cash inflow for the year was
$1,907,000 (30 June 2022 $3,335,000).
In February 2023, Quickstep refinanced its existing debt facilities with the Commonwealth Bank of Australia.
Within a total facility limit of $15.7 million, $13.6 million is secured with a term of 3 Years, $1 million up to 5
Years with the balance of $1.1 million subject to annual review. $3.6 million of the facility is subject to
quarterly amortisation over a 3 Year period (ie: principal repayments of $300,000 per quarter). At 30 June
2023 facilities are fully drawn.
Prior to 30 June 2023, debt covenant calculation modifications were approved, which excluded the
Aftermarket Line of Business results from the Debt to EBITDA covenant and Debt Service Cover ratio as at June
2023 and September 2023.
Management have prepared 12 month cashflow forecasts underpinning the basis of preparation as a going
concern. Management prepared cashflow forecasts for the Group are dependent on a combination of the
following assumptions:
§
§
§
§
improving the trading performance of the Aftermarket business following the recent announcement
of renewed and new customer commitments;
continuing the implementation of cash management controls including working with suppliers to
extend payment terms;
executing on plans to return to a lower level of working capital inventory through a combination of
reduced purchasing and a return to normalised production;
operationalising contractually available upfront quarterly performance based receipts from a key
customer to address long cash conversion cycles and delivering on sales required under previously
agreed performance based receipts;
§ management of specific key equipment reliability issues (Aerostructures impact) and related impacts
on trading performance, and
§ making supplier payments to bring overdue suppliers within originally agreed payment terms.
The going concern basis presumes that a combination of the above funding and operational solutions, as
deemed appropriate by the Directors, will be achieved and that the realisation of assets and settlement of
Quickstep Holdings Limited
23
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
36
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
A. About this Report
liabilities will occur in the normal course of business. The combined effect of the above represents a material
uncertainty as to whether the Group would continue as a going concern.
The directors of Quickstep consider that the Group will continue to fulfil all obligations as and when they fall
due for the foreseeable future and accordingly consider that the Group’s financial statements should be
prepared on a going concern basis. Accordingly, the financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or to the amounts and classification
of liabilities that might be necessary should the Group not continue as a going concern.
Recognition of tax benefits
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised. Future taxable profits are estimated based on future profits forecast
taking into account income tax reconciliation required under the current tax legislation.
Provisions
Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past
event, it is probable that settlement will be required, and the obligation can be reliably estimated. Provisions
which are not expected to be settled within 12 months are measured at the present value of the estimated
future cash outflows to be made by the group.
Goodwill Assessment
The Group had initially recognised goodwill of $2,287,000 in relation to its investment in Quickstep Aerospace
Services Pty Ltd (“QAS”), following its acquisition on 18 February 2021. The QAS operation is based in
Tullamarine, Victoria, Australia and represents the Group’s Aftermarket business segment. During the financial
year ended 30 June 2023, the Group has recognised a Goodwill impairment of ($2,287,000) (2022: $nil) in
respect of this Goodwill.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
A. About this Report
Significant Accounting Policies
The accounting policies have been applied consistently to all periods presented in these consolidated financial
statements and have been applied consistently by all entities in the Group. Other significant accounting policies
are contained in the notes to the consolidated financial statements to which they relate.
Basis of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Quickstep
Holdings Limited (“Company” or “parent entity”) as at 30 June 2023 and the results of all subsidiaries for the
year then ended. Quickstep Holdings Limited and its subsidiaries together are referred to in the financial
statements as the consolidated entity or the Group.
A subsidiary is any entity controlled by the parent entity. The Group controls an entity when it is exposed to, or
has rights to, variable returns from its involvement with the entity and, has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group, and de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset of the subsidiary. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Foreign currency translation
Transactions, assets and liabilities denominated in foreign currencies are translated into Australian dollars at
reporting date using the following exchange rates:
Foreign currency amount
Applicable exchange rate
Transactions
Date of transaction
Monetary assets and liabilities
Reporting date
Foreign exchange gains and losses resulting from translation are recognised in the Income Statement, except for
qualifying cash flow hedges which are deferred to equity.
On consolidation, the assets, liabilities, income and expenses of foreign operations are translated into Australian
dollars using the following applicable exchange rates:
Foreign currency amount
Applicable exchange rate
Income and expenses
Average monthly rate
Assets and liabilities
Equity and reserves
Reporting date
Historical date
Foreign currency differences resulting from translation are recognised in other comprehensive income and
presented in the foreign currency translation reserve in equity. When a foreign operation is disposed of, such
that there is a loss of control, significant influence or joint control, the relevant amount in the foreign currency
translation reserve is transferred to the statement of comprehensive income.
Quickstep Holdings Limited
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38
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
This section provides the information that is most relevant to understanding the financial performance of the
Group during the financial year and, where relevant, the accounting policies applied, and the critical judgements
and estimates made.
B.1
B.2
B.3
B.4
B.5
B.6
Revenue and other income
Segment Reporting
Profit per Share
Corporate and Administrative expenses
Notes to Statement of Cash Flows
Income Tax Benefit
B.1
Revenue and other income
Recognition and Measurement
Revenue
Under AASB 15 the Group has determined that for made-to-order parts, the customer controls all the work in
progress as the products are being manufactured. This is because under those contracts, parts are made to a
customer’s specification and if a contract is terminated by the customer, then the Group is entitled to
reimbursement of the costs incurred to date, including a reasonable margin. Therefore, revenue from these
contracts and the associated costs are recognised over time – i.e., before the goods are delivered to the
customers’ premises. Invoices are issued according to contractual terms. Un-invoiced amounts are presented as
contract assets.
The Group uses the input method (costs-incurred) to measure progress as this measure faithfully depicts the
transformation of the work in progress. Under this approach, the entity recognises revenue based on the costs
incurred to date for made to order parts.
To the extent to which amounts are received in advance of the provision of the related parts, the amounts are
recorded as contract liability and credited to the statement of comprehensive income as goods delivered.
Research and development expenses
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical
knowledge and understanding, is recognised in the statement of comprehensive income as an expense as
incurred.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
B.1
Revenue and other income
Government grants
Grants from the government that compensate the Group for expenses incurred are recognised in the profit and
loss as Other Income on a systematic basis in the periods in which the expenses are recognised.
Grants that the Group receives in relation to assets have been presented as a deduction in arriving at the carrying
amount of the asset.
The Group has complied with all grant conditions.
Segment Reporting
B.2
The Group has identified its operating segments based on the internal reports reviewed by the CEO who is the
Chief Operating Decision Maker responsible for decision making in respect of allocation of resources. The
reportable segment of the group are 1) Aerostructures, which is involved in manufacturing of aerospace
composites products 2) Aftermarket, which is responsible for maintenance, repair, and overhaul services and 3)
Applied Composites which provide advanced composite based engineering and manufacturing services. The
segment measure of performance is gross margin.
Geographical Information
In presenting information on the basis of geographical segments, segment revenue is based on the geographical
location of customers. Segment assets are based on the geographical location of the assets.
Revenue:
United States of America
Australia
United Kingdom
Total
Non-current assets:
United States of America
Australia
Total
2023
$000
2022
$000
70,081
23,924
374
94,379
-
34,042
34,042
63,219
23,456
-
86,675
-
39,933
39,933
Operating Segment Information 2023
Aerostructures
Aftermarket
Revenue
Gross Margin
Other Expenses
Profit/(loss) before
income tax
Total Assets
Total Liabilities
Additions to Non
Current Assets
$’000
87,386
14,212
-
56,974
36,935
320
$’000
5,333
(3,587)
-
9,347
5,347
39
Quickstep Holdings Limited
Applied
Composites
$’000
1,660
(962)
-
Corporate
(unallocated)
$’000
-
-
15,851
Combined QHL
Group
$’000
94,379
9,663
15,851
2,706
1,021
531
8,698
17,204
-
(6,188)
77,725
60,507
890
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STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
40
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
Operating Segment Information 2022
Aerostructures
Aftermarket
$’000
82,059
15,151
-
62,984
40,574
1,098
$’000
3,403
(1,842)
-
5,456
5,490
182
Applied
Composites
$’000
1,213
(45)
-
Corporate
(unallocated)
$’000
-
-
13,429
Combined QHL
Group
$’000
86,675
13,264
13,429
1,094
1,081
-
-
10,196
10,212
-
(165)
79,730
57,357
1,280
Revenue
Gross Margin
Other Expenses
Profit/(loss) before
income tax
Total Assets
Total Liabilities
Additions to Non
Current Assets
Major Customers
Revenues from the three major customers of the Group’s Aerostructures segment represented approximately
$49,802,000 (2022: $44,105,000), $20,173,000 (2022: $18,829,000) and $17,000,000 (2022: $16,469,000)
respectively of the Group’s total revenues.
Profit per Share
B.3
The calculation of basic profit per share is based on the profit attributable to ordinary shareholders and a
weighted-average number (WAN) of ordinary shares outstanding.
Profit / (loss) attributable to ordinary shareholders
Weighted average number of ordinary shares:
Shares at beginning of period
Shares issued during the year
Weighted average number of shares used as the denominator in calculating basic
earnings per share
Adjustment for calculation of diluted earnings per share
2023
$
(5,709,137)
2022
$
785,615
2023
Number
2022
Number
71,726,214
-
71,626,934
98,210
71,726,214
71,725,144
Under share based payment arrangements (anti dilutive in 2023)
-
1,141,891
Weighted average number of shares used as the denominator in calculating
diluted earnings per share
71,726,214
72,867,035
Basic profit / (loss) cents per share
Diluted profit / (loss) cents per share
(7.96)
(7.96)
1.10
1.08
Rights granted under IRP which have passed their first testing date are considered to be potential ordinary
shares. They have been included in the determination of diluted earnings per share, unless they are considered
anti-dilutive.
Quickstep Holdings Limited
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41
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
Corporate and Administrative expenses
B.4
Corporate and administrative expenses include a $400,000 writeback of legal accruals previously held by a
foreign controlled entity. Any outflow related to those accruals in no longer considered probable.
B.5 Notes to Statement of Cash Flows
Cash and Cash Equivalents
Cash at bank and in hand
Reconciliation of Net Profit to Net Cash Provided by Operating Activities
Profit / (loss) for the period
Adjustments for:
ROU asset amortisation
Depreciation and amortisation
(Gains)/loss on asset disposals
Impairment loss
Share based payment expense
Net foreign currency losses
Adjustment for government grant capitalised
Legal accrual writeback
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in prepayments and other assets
(Increase)/decrease in inventories
Increase in contract assets
Increase in deferred tax asset
(Decrease)/increase in trade and other payables
(Decrease)/increase in contract liabilities
(Increase) /decrease in prepaid interest
Increase in employee benefit obligations
Net cash from operating activities
2023
$000
5,611
2023
$000
(5,709)
2,027
2,851
28
2,287
253
727
400
-
(3,256)
(76)
2,008
(865)
(478)
(5,900)
7,369
-
242
1,907
2022
$000
3,021
2022
$000
786
1,975
2,859
7
-
166
346
-
(1,158)
(197)
(401)
(5,250)
(2,242)
(951)
7,199
-
-
196
3,335
Quickstep Holdings Limited
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STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
42
2023
$000
2022
$000
1,636
-
1,636
(478)
(680)
478
2023
$000
(6,188)
1,856
(8)
(29)
29
(680)
-
(690)
478
232
-
232
(239)
958
951
2022
$000
(165)
50
(57)
141
(141)
-
958
-
951
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
B.6
Income Tax Benefit
Reconciliation of Income Tax Benefit Recognised in Statement of Profit or Loss
Numerical reconciliation of income tax benefit to prima facie tax payable is as follows:
Current tax expense
Current Year tax expense
Changes in estimates related to prior year
Deferred tax expense
Origination and reversal of temporary difference
Tax losses (not recognised)/recognised
Income tax benefit
Profit / (loss) from continuing operations
Tax (expense)/benefit at the Australian tax rate of 30% (2022 – 30%)
Expenditure not allowable for income tax purposes
Effect of different tax rate for overseas subsidiaries
Deferred tax asset related to foreign jurisdictions
Current year losses for which no deferred tax asset is recognised
Tax losses brought to account
Non deductible impairment
Income tax benefit
Deferred tax assets/(liabilities)
Particulars
Provision for Annual Leave
Other provisions
Superannuation accrual
Provision for LSL
Work in progress – deductible
Lease liabilities
Other expenditure
PPE & Intangibles and ROU
Tax losses carried forward
Total deferred tax balances
Balance as on
1 July 2022
$’000
Recognised in
the P&L
$’000
Net Balance as
on
30 June 2023
$’000
539
382
74
332
146
5,721
75
(3,631)
1,414
5,052
75
239
2
179
(67)
(455)
(66)
571
-
478
614
621
76
511
79
5,266
9
(3,060)
1,414
5,530
Quickstep Holdings Limited
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43
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
B.6
Income Tax Benefit
Particulars
Provision for Annual Leave
Other provisions
Super
Provision for LSL
Work in progress – deductible
Prov. For stock obsolescence
Lease liabilities
Other expenditure
PPE & Intangibles and ROU
Tax losses carried forward
Total deferred tax balances
Balance as on
1 July 2021
$’000
Recognised in
the P&L
$’000
Net Balance as
on
30 June 2022
$’000
564
155
89
251
108
(8)
5,836
201
(3,797)
702
4,101
(25)
227
(15)
81
38
8
(115)
(126)
166
712
951
539
382
74
332
146
-
5,721
75
(3,631)
1,414
5,052
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax
assets have not been recognised in respect of certain tax losses because the Group considers it prudent to
defer recognition until the Group generates consistently taxable income. The tax losses are subject to
availability and continued assessment under the ATO testing rules.
Tax Losses not brought to Account
The gross amount of unused tax losses for which no deferred tax asset has been
recognised
Tax Consolidation Legislation
2023
$000
2022
$000
57,614
53,046
Quickstep Holdings Limited and its 100% owned Australian resident subsidiaries have formed a tax consolidated
Group effective from 1 July 2010.
Recognition and Measurement
Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit and
loss except to the extent that it related to a business combination, or items recognised directly in equity or in
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted
or substantially enacted at reporting date, and any adjustment to tax payable in respect of previous years.
Quickstep Holdings Limited
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STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
44
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
B. Business Performance
B.6
Income Tax Benefit
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income
tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than
a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted
by the end of the reporting period and are expected to apply when the related deferred income tax asset is
realised, or the deferred income tax liability is settled.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable
that the related tax benefit will be realised.
The Group has recognised a deferred tax asset relating to tax losses to the extent there are sufficient taxable
temporary differences against which the unused tax losses can be utilised. Utilisation of tax losses also depends
on the ability of the entity to satisfy certain tests at the time the losses are recouped. The recognised tax losses
are subject to the shareholder continuity test.
The Group has reviewed tax losses and determined that for certain losses it is probable that future taxable profits
will be available against which the recognised tax losses can be utilised.
Quickstep Holdings Limited
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45
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
This section provides information relating to the Group’s capital structure and its exposure to financial risks, how they
affect the Group’s financial position and performance and how the risks are managed.
C.1
C.2
C.3
C.4
C.5
C.6
C.7
C.8
Loans and Borrowings
Leases
Finance Income and Finance Expenses
Financial Instruments
Financial Risk Management
Capital and Reserves
Capital and other Commitments
Provisions
C.1
Loans and Borrowings
2023
Non-
current
$000
2,100
10,000
12,100
Current
$000
1,200
-
1,200
Total
$000
Current
$000
3,300
10,000
13,300
2,564
-
2,564
2022
Non-
current
$000
1,282
6,000
7,282
Total
$000
3,846
6,000
9,846
Effective
interest rate
6.80%
6.80%
Year of maturity
2026
2026
2023
Maximum facility
value
$000
2022
Maximum facility
value
$000
3,300
10,000
3,846
6,000
Secured bank loan
Working capital facility
Term and Debt Repayment Schedule
Secured bank loan
Short term facility
Secured Bank Loan
On 6 March 2023 Quickstep Holdings Limited refinanced with Commonwealth Bank of Australia (CBA). The new
arrangement includes a working capital facility of $10 million and a term loan of $3.6 million. The working capital facility
requires repayment in 3 years. The term loan is reduced by quarterly repayments of $300,000. The interest rate on the
facility comprises a variable base rate and fixed margin with quarterly repayments to be completed by June 2026. The
facility is secured against the working capital of the group.
Quickstep Holdings Limited
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STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
46
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.1
Loans and Borrowings
Working capital facility
On 17 February 2023 Quickstep Holdings Limited executed a loan agreement with CBA for $13,600,000 to refinance the
existing ANZ and EFA facilities. The working capital facility has been extended and is required to be repaid by June 2026.
The interest rate on the facility comprises a variable base rate and fixed margin.
Loan covenant
The group exceeded its EBITDA and Debt Service Cover covenant threshold in the fourth quarter of 2023. However,
management obtained a waiver prior to 30 June 2023 from CBA bank and modified the June 2023 and September 2023
covenant compliance dates for Debt to EBITDA and Debt Service Cover. Accordingly, the loans were not payable on
demand at 30 June 2023.
Recognition and Measurement
Non-derivative financial liabilities
All financial liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the
trade date at which the Group becomes a party to the contractual provisions of the instrument. The Group derecognises
a financial liability when its contractual obligations are discharged or cancelled or expire. Financial assets and liabilities
are offset and the net amount presented in the statement of financial position when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability
simultaneously.
C.2
Leases
The Group leases assets including properties, production equipment and IT equipment. The Group recognizes a right-of-
use asset and lease liability. Lease liabilities are measured at the present value of the remaining lease payments,
discounted using the interest rate implicit in the lease, or if that is not available, then Group’s incremental borrowing
rate at the lease commencement date. Right-of-use asset is initially measured at cost and subsequently depreciated over
a straight line to the end of the lease term.
The Group has elected not to recognize right-of-use assets and lease liabilities of low value assets or short term leases.
The Group recognises the lease payments associated with these leases as an expense on a straight line basis over the
term of the lease.
Right-of-use assets
Right-of-use assets related to leased properties and equipment are recognised under AASB 16 and presented in the
following table.
Right-of-use assets:
Opening net book amount
Adjustments to ROU assets due to reassessment or modification
Addition of new leases
Amortisation charge for the year
Closing net book amount
Quickstep Holdings Limited
2023
$000
2022
$000
15,551
16,526
-
125
(2,027)
13,649
495
505
(1,975)
15,551
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47
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.2
Leases
Lease liabilities
Lease liabilities related to leased properties and equipment are recognised under AASB 16 and presented in the
following table.
Lease liabilities:
Current
Non-current
Total lease liabilities
2023
$000
2022
$000
1,856
15,697
17,553
1,628
17,443
19,071
Amounts recognised in Consolidated Statement of Profit or Loss
The following table summarises expenses related to AASB 16 leases that are included in the Consolidated Statement of
Profit or Loss.
AASB 16 leases:
Interest on lease liabilities
Amortisation charge
Total expenses
2023
$000
2022
$000
1,149
2,027
3,176
1,226
1,975
3,201
Amounts recognised in Consolidated Statement of cash flows
The following table summarises cashflows related to AASB 16 leases that are included in the Consolidated Statement of
Cashflows.
AASB 16 leases:
Total cash outflow for leases – Principal
Total cash outflow for leases – Interest
Total cashflows
2023
$000
2022
$000
(1,641)
(1,149)
(2,790)
(82)
(1,226)
(1,308)
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.3
Finance Income and Finance Expenses
Finance income
Interest income
Finance expenses
Interest expense on liabilities measured at amortised cost
Interest expenses leased liabilities
Foreign currency gains or (losses)
Other expenses and adjustment to borrowing costs
Finance expenses
Net finance costs
Recognition and Measurement
Finance income and finance expenses
2023
$000
39
(940)
(1,149)
(727)
(150)
(2,966)
(2,927)
2022
$000
45
(347)
(1,226)
(346)
(108)
(2,027)
(1,982)
Finance income comprises interest income on funds invested (including securities designated as FVOCI). Interest income
is recognised as it accrues in profit and loss, using the effective interest method.
Finance expenses comprise interest expense on borrowings calculated using the effective interest method, transaction
costs, unwinding discounting of provisions, and foreign exchange gains and losses. The interest expense component of
finance lease payments is recognised in the profit and loss using the effective interest method.
C.4
Financial Instruments
Current liability
Forward foreign exchange contracts – cash flow hedges
Recognition and Measurement
2023
$000
(101)
2022
$000
(593)
Recognition
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of
the derivative is recognised in Other Comprehensive Income and accumulated in the cash flow hedge reserve. Any
ineffective portion of changes in the fair value of the derivative is recognised immediately in profit and loss. The Group
uses forward foreign exchange contracts to hedge its currency exposure risk in relation to sales in US dollars – all hedges
have a maturity date less than one (1) year from reporting date. The Group documents at the inception of the hedging
transaction the relationship between hedging instruments and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will
continue to be highly effective in offsetting changes in fair values or cash flows of hedged items.
Valuation of Forward Exchange Contracts
Foreign currency forward contracts are initially recognised at fair value on the date a derivative contract is entered into
and are subsequently remeasured to their fair value at the end of each reporting period. The fair value is determined
using the quoted forward exchange rates at the reporting date and present value calculations based on high quality
credit yield curves in the respective currencies. This is considered a level 2 fair value under the fair value hierarchy.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
Financial Risk Management
C.5
Overview
The Group has exposure to the following risks from its use of financial instruments:
• Credit risk;
•
• Market risk.
Liquidity risk, and
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and
processes for measuring and managing risk, and the management of capital. Further quantitative disclosures are
included throughout these financial statements.
The Company’s Board of Directors has overall responsibility for the establishment and oversight of the risk management
framework and is responsible for developing and monitoring risk management policies.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Group’s activities. The Group, through training and
management standards and procedures, aims to develop a disciplined and constructive control environment in which
all employees understand their roles and obligations.
The Group’s Audit, Risk and Compliance Committee oversees how management monitors compliance with the Group’s
risk management policies and formally documented procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group’s receivables from customers and cash balances and
deposits. The carrying amount of the Group’s financial assets represents the maximum credit exposure.
Trade receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,
management also considers other characteristics including the default risk of the industry and country in which
customers operate, as these factors may have an influence on credit risk. Goods are generally sold subject to retention
of title clauses, so that in the event of non-payment the Group may have a secured claim. The Group does not require
collateral in respect of trade and other receivables.
Cash balances and deposits
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have
a credit rating of at least A+ from Standard & Poor’s. Given these high credit ratings, management has assessed the risk
that counterparties fail to meet their obligations as low.
As at the reporting date, financial assets are not impaired.
Quickstep Holdings Limited
37
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
50
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.5 Financial Risk Management
Exposure to credit risk
The Group’s maximum exposure to credit risk for trade receivables and contract assets at the reporting
date by geographic region was:
Australia
United States of America
The following are the contractual maturities of Trade receivables:
2023
$000
15,014
8,369
23,383
2022
$000
12,861
6,406
19,267
Carrying
amount
$000
Contractual
Cash flows
$000
Current
$000
+30 days
$000
+60 days
$000
+90 days
$000
+120 days
$000
12,225
11,158
12,225
11,158
7,096
11,158
1,024
874
354
2,877
8,973
10,294
8,973
10,294
8,454
10,294
209
276
9
25
At 30 June 2023
Trade receivables
Contract Assets
At 30 June 2022
Trade receivables
Contract Assets
Liquidity Risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquid assets to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
Typically, the Group ensures that it has sufficient cash or funds otherwise reasonably available to it from fundraising
activities to meet expected operational expenses, including the servicing of financial obligations. This excludes the
potential impact of circumstances that cannot reasonably be predicted.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding
the impact of netting agreements:
At 30 June 2023
Trade and other payables
Secured bank loan
Short term facility – CBA
Financial Instruments
Lease liabilities
Contractual
Cash flows
$000
(13,489)
Less than
6 months
$000
(13,489)
10,000
(12,040)
(3,468)
(101)
(620)
(340)
(101)
Carrying
amount
$000
13,489
3,300
101
17,553
44,443
6 – 12
months
$000
Between 1
and 2 years
$000
Between 2
and 5 years
$000
Greater
than 5 years
$000
-
(620)
(340)
-
(1,282)
(680)
-
(946)
(10,680)
(8,479)
(20,105)
-
-
(8,556)
(8,556)
(22,641)
(1,407)
(51,739)
(15,957)
(1,437)
(2,397)
(2,762)
(4,742)
Quickstep Holdings Limited
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QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
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51
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.5
Financial Risk Management
Carrying
amount
$000
19,393
3,846
6,000
593
19,071
48,903
At 30 June 2022
Trade and other payables
Secured bank loan
Working capital facility – EFA
Financial Instruments
Lease liabilities
Market Risk
Contractual
Cash flows
$000
(19,393)
Less than
6 months
$000
(19,393)
-
(3,846)
(6,333)
593
(19,071)
(641)
(1,923)
-
593
(852)
-
-
(915)
(49,236)
(21,479)
(2,838)
6 – 12
months
$000
Between 1
and 2 years
$000
Between 2
and 5 years
$000
Greater
than 5 years
$000
-
(1,282)
(6,333)
-
(1,767)
(9,382)
-
-
-
-
-
-
-
-
(3,534)
(3,534)
(12,003)
(12,003)
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.
Interest rate risk
The Group has entered into a variable rate loan agreement for a period of 3 years. The applicable interest rate is re-set
on a quarterly basis in accordance with the 90 days bank bill rate.
The Group is exposed to interest rate risk pre-dominantly on cash balances and deposits and loans and borrowings.
Given the relatively short investment horizon for these, management has not found it necessary to establish a policy on
managing the exposure of interest rate risk.
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial assets/ (liabilities) was:
Fixed rate instruments
Term deposits
Variable rate instruments
Cash and cash equivalents
Secured bank loan
Working capital facility agreement – ANZ
Working capital facility agreement - CBA
Total variable rate instruments
2023
$000
2022
$000
-
891
5,611
(3,300)
-
(10,000)
(7,689)
3,021
(3,846)
(6,000)
-
(6,825)
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by
the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain
constant. The analysis is performed on the same basis as FY22.
Variable rate instruments – increase by 100 basis points
Variable rate instruments – decrease by 100 basis points
2023
$000
(133)
133
2022
$000
(98)
98
Quickstep Holdings Limited
39
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
52
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.5
Financial Risk Management
Currency risk
The Group is exposed to currency risk on sales, purchases and cash holdings that are denominated in a currency other
than the respective functional currencies of Group entities, primarily the Australian dollar (AUD), Euro (EUR), Great
Britain Pounds (GBP) and US Dollar (USD). The currencies in which these transactions primarily are denominated are
AUD, EUR and USD.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net
exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address
short-term imbalances.
The Group’s investment in its German subsidiary is not hedged as the currency positions are considered to be long-term
in nature.
The Group’s exposure to foreign currency risk at the end of the reporting period was as follows:
2023
USD 000
2023
EUR 000
2023
GBP 000
2022
USD 000
2022
EUR 000
2022
GBP000
Receivables
Cash
Trade payables
8,369
4,654
(4,352)
8,671
-
-
(19)
(19)
-
-
(61)
(61)
6,406
997
(7,090)
313
-
-
(33)
(33)
-
-
(201)
(201)
The following significant exchange rates applied have been applied:
AUD v USD
AUD v EUR
AUD v GBP
Average rate
2023
0.6735
0.6440
0.5598
2022
0.7261
0.6439
0.5454
Sensitivity analysis
A 10 percent movement of the Australian dollar against the following currencies at 30 June would have effected the
movement of financial instruments denominated in a foreign currency and affected profit and loss by the amounts
shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores
any impact of forecast sales and purchases. The analysis is performed on the same basis as FY22.
Index
US/AUD exchange rate – increase (10%)
US/AUD exchange rate – decrease 10%
EUR/AUD exchange rate – increase (10%)
EUR/AUD exchange rate – decrease 10%
GBP/AUD exchange rate – increase (10%)
GBP/AUD exchange rate – decrease 10%
Fair Value Hierarchy
Profit or loss
2023
$000
(1,192)
1,457
3
(3)
11
(13)
262
2022
$000
(41)
50
5
(6)
32
(39)
1
Equity, net of tax
2022
$000
2023
$000
(1,192)
1,457
3
(3)
11
(13)
262
(41)
50
5
(6)
32
(39)
1
Financial assets and liabilities, including foreign currency hedges are considered level 2 in the fair value hierarchy. The
carrying value of financial assets and liabilities carried at amortised costs, approximate their fair value. During the year,
there have been no transfers between levels in the fair value hierarchy. The fair value of investments are considered
Level 3 based on latest available share sales of the investee.
Quickstep Holdings Limited
40
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
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REPORT
53
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.6
Capital and Reserves
Capital Management
The Group’s objectives are to safeguard the Group’s ability to continue as a going concern and maintain a strong capital
base sufficient to maintain future development in accordance with the business strategy. In order to maintain or adjust
the capital structure, the Group may return capital to shareholders or issue new shares. The Group’s focus has been to
raise sufficient funds through equity and borrowings to fund its working capital, business growth and commercialisation
of technology as outlined in note A Going concern (p.23). There were no changes in the Group’s approach to capital
management during the year.
Movements in Share Capital
Opening balance
Consolidation of Issued Shares
Shares issued under share based payments arrangements
Shares issued to Quickstep Employee Exempt Share Plan
Closing balance
2023
Shares
71,726,214
-
-
-
71,726,214
2022
Shares
716,269,344
(644,641,340)
-
98,210
71,726,214
2023
$000
2022
$000
120,785
-
-
-
120,785
120,785
-
-
-
120,785
During the year, the Company issued NIL (2022: NIL) shares pursuant to share-based payment arrangements with certain
key management personnel and issued NIL (2022: 98,201) shares to its employees under Exempt Share Plan.
The Company consolidated its issued share capital (in the ratio of one share for every 10 shares held) at its 2021 Annual
General Meeting of Shareholders on 18 November 2021.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share
options are recognised as a deduction from equity, net of any tax effects.
The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully
paid.
There are Nil (2022: Nil) unissued ordinary shares of Quickstep Holdings Limited under option at the date of this report.
No options were granted during the year and since the end of the financial year.
Nature and purpose of reserves
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements
of foreign operations, as well as the effective portion of any foreign currency differences arising from hedges of a net
investment in a foreign operation.
Cash flow hedge reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging
instruments used in cash flow hedges pending subsequent recognition in profit or loss or directly included in the initial
cost or other carrying amount of a non-financial asset or non-financial liability.
Share based payments reserve
The reserve for share-based payments comprises the fair value of equity instruments granted by the Group based on
market prices taking into account the terms and conditions upon which the instruments were granted.
Quickstep Holdings Limited
41
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
54
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
C. Capital and Financial Risk Management
C.7
Capital and Other Commitments
Capital Commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as
follows:
Property, plant and equipment
Other Commitments – Pledged as Collateral against Secured Bank Loan
2023
$000
72
2022
$000
52
On 17 February 2023 Quickstep Holdings Limited (the Company) executed a loan agreement with Commonwealth Bank
Limited (CBA) to refinance the existing ANZ and EFA facilities. The Company has provided CBA with a Corporate
Guarantee and Indemnity as well as a security interest over the Group’s assets by way of a General Security Agreement
(GSA).
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
2023
$000
5,611
12,297
12,902
11,819
2022
$000
3,021
9,043
14,910
13,998
Under the agreement with CBA, Quickstep Holdings Limited and the other Group companies party to the GSA have
agreed to the following restricted dealings. Without the consent of CBA they may not:
• Create or allow another interest in any Collateral other than and Permitted Encumbrance,
• Dispose, or part with possession, of any Collateral.
Term of
Liability
Subject to
annual review
Currency
AUD
Nature of
Beneficiary
CBA
Balance
Facility Limit
$891,481
$900,000
Nature of Liability
To issue rental
bonds to support
the lease
arrangement of the
Borrower
C.8
Provisions
Balance at 1 July 2022
Provisions made during the year
Provisions used during the year
Balance at 30 June 2023
Restructuring costs
$000
-
Make good provision
$000
3,448
-
-
-
-
-
3,448
Total
$000
3,448
-
-
3,448
Quickstep is required to restore all leased premises to their original condition at the end of the respective lease terms.
A provision has been recognised for the present value of the estimated expenditure required to remove any leasehold
improvements. These costs have been capitalised as part of the cost of leasehold improvements and are amortised over
the term of the lease.
Quickstep Holdings Limited
42
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
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REMUNERATION
REPORT
FINANCIAL
REPORT
55
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
D. Operating Assets and Liabilities
This section provides information relating to the operating assets and liabilities of the Group. Quickstep has a strong
focus on maintaining a strong balance sheet through continued focus on cash conversion. The Group’s strategy also
considers expenditure, growth and acquisition requirements.
D.1 Trade and Other Receivables
D.2
Inventories
D.3 Contract Assets
D.4 Property, Plant and Equipment and Software
Investments
D.5
D.6 Goodwill
D.1
Trade and Other Receivables
Current assets
Trade receivables
Other receivables
All trade receivables are current.
Recognition and Measurement
2023
$000
12,224
73
12,297
2022
$000
8,973
70
9,043
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial
assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date at which
the Group becomes a party to the contractual provisions of the instrument.
The Group de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all
the risks and rewards of ownership of the financial asset are transferred.
Quickstep Holdings Limited
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STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
56
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
D. Operating Assets and Liabilities
D.2
Inventories
Current assets
Raw materials and consumables
Work in progress
Recognition and Measurement
2023
$000
12,533
369
12,902
2022
$000
14,733
177
14,910
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first in
first out principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and
other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories
and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of
completion and selling expenses.
D.3
Contract Assets and Liabilities
Contract Assets - Current
2023
$000
11,158
2022
$000
10,294
Contract assets primarily relate to the Group’s rights to consideration for work performed but not billed at the reporting
date. Under AASB 15 the Group has determined that for made-to-order parts, the customer controls all the work in
progress as the products are being manufactured. This is because under those contracts, parts are made to a customer’s
specification and if a contract is terminated by the customer, then the Group is entitled to reimbursement of the costs
incurred to date, including a reasonable margin. Therefore, revenue from these contracts and the associated costs are
recognised over time – i.e., before the goods are delivered to the customers’ premises. Invoices are issued according to
contractual terms. Uninvoiced amounts are presented as contract assets.
Contract Liabilities - Current
2023
$000
8,868
2022
$000
1,500
Contract Liabilities primarily relate to advance consideration received from customers for revenue which is recognised
over time. The performance obligations in respect of these amounts are expected to be completed in the 2024
financial year. The amount of $8,868,000 at 30 June 2023 will be recognised as revenue in 2024.
Quickstep Holdings Limited
44
QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
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REPORT
57
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
D. Operating Assets and Liabilities
D.4
Property, Plant and Equipment and Software
Plant and
equipment
$000
Assets under
construction
$000
Office furniture
& equipment
$000
Software
$000
Total
$000
June 2023
Opening net book amount
Additions
Acquired through business combination
Government funding received
Transfers from assets under construction
Disposals
Amortisation of grant
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation
June 2022
Opening net book amount
Additions
Customer and government funding received
Transfers from assets under construction
Disposals
Amortisation of grant
Depreciation charge
Closing net book amount
Cost
Accumulated depreciation
12,328
-
-
(400)
900
(45)
226
(2,453)
10,556
43,738
(33,182)
12,997
-
(104)
1,660
(5)
309
(2,530)
12,328
43,057
(30,729)
245
890
-
-
(1,007)
-
-
-
128
129
-
1,602
1,280
-
(2,638)
-
-
-
245
245
-
1,103
323
13,998
-
-
-
107
-
-
(239)
971
2,272
(1,301)
396
-
-
884
-
-
(176)
1,103
2,165
(1,062)
-
-
-
-
-
-
(159)
164
2,028
(1,864)
382
-
-
94
-
-
(153)
323
2,028
(1,705)
890
-
(400)
-
(45)
226
(2,851)
11,819
48,167
(36,347)
15,378
1,280
(104)
-
(5)
309
(2,859)
13,999
47,495
(33,496)
Quickstep Holdings Limited
45
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
58
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
D. Operating Assets and Liabilities
D.4
Property, Plant and Equipment and Software
Recognition and Measurement
Property, Plant and Equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the
assets to a working condition for their intended use, the costs of dismantling the items and restoring the site on which
they are located and capitalised borrowing costs.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment. The gain or loss on disposal of an item of property, plant
and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and
equipment and is recognised net within other income/other expense in profit or loss.
Government grants that compensate the Group for the cost of an asset are recognised as a deduction in arriving at the
carrying value of the asset.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Significant components of individual assets are
assessed and if a component has a useful life that is different from the remainder of the asset, that component is
depreciated separately. Depreciation is recognised in profit and loss on a reducing balance basis over the estimated
useful lives of each component of an item of property plant and equipment.
The depreciation rates used for each class of depreciable asset for the current and prior years are:
Class of Asset
Plant and factory equipment
Office equipment
Depreciation Rates
4% to 51%
3% to 52%
Impairment
The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss
is recognised if the carrying amount of an asset exceeds its estimated recoverable amount.
Impairment losses are recognised in the statement of comprehensive income unless the asset has previously been
revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with
any excess recognised through the statement of comprehensive income.
Quickstep Holdings Limited
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QUICKSTEP ANNUAL REPORT 20232023 HIGHLIGHTSCHAIR’S REPORTCEO & MD REPORTGLOBAL GROWTHTOWARD NET ZERO
DIRECTORS’
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FINANCIAL
REPORT
59
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
D. Operating Assets and Liabilities
D.5
Investments
Non-current Investments
June 2023
$000
3,044
June 2022
$000
3,044
In FY22 Quickstep made a $1.0m investment in a minority stake in Carbonix, an Australian private company with strong
capability in the design, development, manufacture and operation of next generation unmanned solutions for
commercial and military applications, under Quickstep Technologies Pty Ltd (a wholly owned subsidiary of Quickstep).
Quickstep will recognise subsequent changes in the fair value of the Carbonix investment in Other Comprehensive
Income.
An additional $2.0m investment was made in ordinary shares of Swoop Aero Pty Ltd (Swoop) an Australian company
with strong capability in the design, development, manufacture and operation of next generation unmanned solutions
for commercial cargo applications. Quickstep has paid $0.5m in cash in respect of this investment in Swoop and the
remaining $1.5m obligation is covered under a Strategic Supply Agreement (SSA), which requires Quickstep to supply
engineering, manufacturing services, tooling and an initial production run of aircraft for Swoop’s recently launched
KITETM unmanned cargo aircraft. The delivery under the Strategic Supply Agreement. The $1.5m obligation under the
SSA is recorded in Contract Liabilities.
The fair value of these Level 3 Investments is based on latest available share sales of the investee.
Quickstep Holdings Limited
47
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
60
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
D. Operating Assets and Liabilities
D.6 Goodwill Impairment
Assessing for impairment to Goodwill
Goodwill is allocated to each of the Group’s cash-generating units (“CGU”) expected to benefit from the synergies of
the combination. A CGU to which goodwill has been allocated is tested for impairment annually, or more frequently
when there is an indication that the unit may be impaired. An assessment of impairment indicators, including both
internal and external factors, has been performed.
Impairment of Goodwill
I.
The Group had initially recognised goodwill of $2,287,000 in relation to its investment in Quickstep Aerospace Services
Pty Ltd (“QAS”), following its acquisition on 18 February 2021. The QAS operation is based in Tullamarine, Victoria,
Australia and represents the Group’s Aftermarket business segment. The Group has recognised a Goodwill impairment
of $2,287,000 (2022: $nil) in respect of this Goodwill during the half year ended 31 December 2022.
Events and Circumstances that contribute to the impairment.
II.
During the year the Board has reassessed its short and medium forecasts for the Aftermarket business segment.
During FY2023, Aftermarket revenue and profitability has been impacted by a combination of factors including supply
chain constraints, availability of skilled staff and lower work volume inductions. Whilst broad industry representations
remain supportive of on-shore MRO capability establishment, the timing of uplift in induction volumes is inherently
uncertain.
III. Methodology used for recoverable amount of impairment.
The recoverable amount of the Aftermarket CGU has been based on its value in use, determined by discounting the
future cash flows to be generated from the continuing use of the CGU. The carrying amount of the CGU was determined
to be higher than its recoverable amount and an impairment loss of $2,287,000 was recognised. The impairment loss
was fully allocated to goodwill. The fair value less cost of disposal of the CGU was not considered to be more than its
value in use.
Key assumptions used in the determination of the recoverable amount were as follows:
Cashflow projections: Management cashflow forecasts for the CGU for the next 5 years, with a terminal growth rate
of 3.35% thereafter.
Forecast sales growth rates: Forecast sales growth rates based on experience adjusted for the strategic direction and
near-term investment priorities within each CGU.
Discounted Rate: Discount rate is the weighted average cost of capital used to determine the present value of future
cash flows in a discounted cash flow (DCF) analysis. The discount rate used was 11.54% post tax (FY22:10.32% post
tax).
Following the impairment loss recognised in the Group’s Aftermarket CGU, the recoverable amount was equal to the
carrying amount. Therefore, any adverse movement in a key assumption may lead to further impairment of other
non-current assets allocated to the CGU. Following the recognition of the impairment loss at the half year ended 31
December 2022, the Group announced the signing of a Memorandum of Understanding (MoU) with its key customer
in the Aftermarket segment. This MoU provides a customer commitment to increased purchases from the Aftermarket
segment and as a consequence there is no indicator of impairment for the remaining non-current assets within this
CGU.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
E. Employee Benefits
This section provides a breakdown of the various programs Quickstep uses to reward and recognise employees and Key
Management Personnel (KMP). Quickstep believes that these programs reinforce the value of ownership and incentives
and drive performance both individually and collectively to deliver better returns to shareholders.
E.1 Employee Benefit Obligations
E.2 Employee Benefit Expense
E.3 Related Party Transactions
E.4 Quickstep Incentive Rights Plan (IRP)
E.5 Equity Settled Short Term Incentive
E.1
Employee Benefit Obligations
Employee benefit obligation
- Annual leave (current)
- Long service leave (non-current)
Recognition and Measurement
2023
$000
2,046
1,702
3,748
2022
$000
1,990
1,515
3,505
Long service leave
The liabilities for long service leave are not expected to be settled wholly within 12 months after the end of the period
in which the employees render the related service. They are therefore recognised in the provision for employee benefits
and measured as the present value of expected future payments to be made in respect of services provided by
employees up to the end of the reporting period using the projected unit credit method. Consideration is given to future
wages and salaries, experience of employee departures and periods of service. Expected future payments are
discounted using market yields at the end of the reporting period of high-quality corporate bonds with terms and
currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of
experience adjustments and changes in actuarial assumptions are recognised in profit or loss.
E.2
Employee Benefit Expense
Wages and salaries
Defined superannuation contribution expense
Increase in leave liabilities
Share based payments expense
2023
$000
28,483
2,666
242
253
31,644
2022
$000
26,916
2,289
197
166
29,568
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
E. Employee Benefits
E.2
Employee Benefit Expense
Recognition and Measurement
Wages and salaries
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12
months after the end of the period in which the employees render the related service, are recognised in respect of
employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when
the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. All other
short-term employee benefit obligations are presented as payables.
Share-based payment transactions
An expense is recognised for all equity-based remuneration including shares, rights and options issued to employees
and Directors. The fair value of equity instruments granted is recognised, together with a corresponding increase in
equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the award (‘vesting date’). The amount recognised is adjusted to reflect
the actual number of shares and options that vest, except for those that fail to vest due to market conditions not being
met. The fair value of equity instruments granted is measured using a generally accepted valuation model, taking into
account the terms and conditions upon which the equity instruments were granted. The fair value of shares, options
and rights granted is measured based on relevant market prices at the grant date.
E.3
Related Party Transactions
Key Management Personnel Compensation
The key management personnel compensation included in “Employee benefit expense” in Note E.2 is as follows:
Short-term employee benefits (including STI)
Long term benefits (SGC)
LTI
The total value of the rights is allocated to remuneration over the vesting period.
2023
$000
1,398
80
183
1,661
2022
$000
1,222
62
154
1,438
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
E. Employee Benefits
E.4 Quickstep Incentive Rights Plan (IRP)
During the 2014 financial year the Company established the Quickstep Incentive Rights Plan (IRP). The IRP was designed
to facilitate the Company moving towards best practice remuneration structures for executives. The Board reviews the
Rights Plan from time to time and adjusts the Rules to ensure the IRP continues to reflect market practice and remained
appropriate for the Company. These Revised Rules were approved by shareholders at the Company’s 2019 Annual
General Meeting on 18 November 2021.
The IRP authorises the granting of Rights to executives of the Company, in the form of Performance Rights (PRs) and/or
Deferred Rights (DRs) (together, Rights). These rights represent an entitlement on vesting to fully paid ordinary shares
in the issued capital of the Company (Shares) with the total value of Shares being equal to the value of vested Rights
(number of vested Rights x market value of a Share). PRs may vest if Performance Conditions are satisfied. DRs may vest
if service conditions are satisfied. Further details regarding the IRP are set out in the Remuneration Report.
During 2023 an expense of $253,000 (2022: $98,000) has been recognised in the financial statements in respect of the
portion of the fair value of rights attributable to the current financial year as required by accounting standards.
A Monte-Carlo model was used to value the rights. The model’s key assumptions were as follows:
In Relation to Performance Rights
Tranche
FY19
FY20
FY21
FY22
Director
Rights
18/11/2021
FY22
Management
Rights
16/12/2021
Grant date
First testing
date
Expiry date
Share price
at grant
date
Expected life
(years)
Risk free
factor
Volatility of
QHL
Volatility of
AOAI*
Volatility of
XSO^
Dividend
yield
1/09/2018
1/09/2019
15/01/2021
31/08/2021 31/08/2022 31/08/2023
1/09/2024
1/09/2024
31/08/2023 31/08/2024 31/08/2025
1/09/2024
1/09/2024
$0.09
$0.12
$0.09
$0.52
$0.45
3.3
3.3
3
2.8
2.7
2.03%
1.04%
0.11%
0.97%
1.00%
40%
12%
-
0%
50%
12%
-
0%
55%
20%
-
0%
55%
-
21%
0%
55%
-
21%
0%
FY23 Director Rights
1/01/2023
1/09/2025
1/09/2025
$0.54
2.9
3.51%
55%
-
20%
0%
*AOAI – All ordinaries total shareholder return index
^ XSO – ASX small ordinaries index
Quickstep Holdings Limited
51
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
64
Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
E. Employee Benefits
E.4 Quickstep Incentive Rights Plan (IRP)
Rights
Movements in unissued shares under rights:
Opening balance
Consolidation of Rights Granted
Granted during the year
Rights vested
Rights forfeited/lapsed
Closing balance
The rights are issued pursuant to:
2023
No of rights
2,776,827
2022
No of rights
34,577,143
-
(31,119,429)
951,940
927,515
-
(716,565)
3,012,202
-
(1,608,402)
2,776,827
•
Executive services agreements, which rights vest at various times in the future according to years of service
completed.
• Offers under the Incentive Rights Plan (IRP), which vests at various future dates upon satisfaction of performance
conditions and service criteria.
The exercise price of the rights is Nil and the rights are lapsed if employment is terminated prior to the vesting date.
•
E.5
Equity Settled Short Term Incentive
In 2023, Employees are eligible to receive short term incentives (STI) in cash or shares based on achievement of key
performance indicators (KPIs). Each year the RN&D Committee considers the appropriate targets and KPIs and the
alignment of individual rewards to the Group’s performance. These targets may include measures related to the annual
performance of the Group and/or specified parts of the Group and are measured against actual outcomes.
In 2023 NIL (2022: NIL) shares were issued to employees in relation to Short Term Incentive.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
F. Other Disclosures
This section provides details on other required disclosures relating to the Group to comply with the accounting
standards and other pronouncements.
F.1
F.2
F.3
F.4
F.5
F.6
F.7
Group Entities
Parent Entity Financial Information
Deed of Cross Guarantee
Auditors’ Remuneration
Business Combinations
Subsequent Events
New Accounting Standards Not Yet Adopted
F.1 Group Entities
Name of entity
Parent entity
Quickstep Holdings Limited
Controlled entities
Quickstep Technologies Pty Limited *
Quickstep Systems Pty Limited *
Quickstep GmbH
Quickstep Automotive Pty Limited *
Quickstep Aerospace Pty Limited *
Quickstep USA Inc.
Quickstep Aerospace Services Pty Limited*
Country of
Incorporation
Australia
Australia
Australia
Germany
Australia
Australia
USA
Australia
Ownership Interest
2022
2023
%
%
100
100
100
100
100
100
100
100
100
100
100
100
100
100
* Companies entered into deed of cross guarantee with Quickstep Holdings Limited.
F.2 Parent Entity Financial Information
As at, and throughout, the financial year ending 30 June 2023 the parent entity of the Group was Quickstep Holdings
Limited.
Results of the parent entity
(Loss) for the year
Other comprehensive income
Total Comprehensive (loss)
Financial position of the parent entity at year end*
Total assets
Total liabilities
Net assets / (liabilities)
Total equity of the parent entity comprises*
Share capital
Share based payments reserve
Accumulated losses
Total equity
2023
$000
2022
$000
(6,423)
253
(6,170)
61,979
(17,109)
44,870
120,785
7,822
(83,737)
44,870
(3,055)
-
(3,055)
54,443
(3,403)
51,040
120,785
7,569
(77,314)
51,040
The parent entity has entered into a Deed of Cross Guarantee with the effect that the company guarantees debts in
respect of certain subsidiaries. Further details are disclosed in Note F.3.
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
*Note: The comparative information has been restated to account for a reclassification of $43,091k to the Intercompany balance
from equity to Total Assets.
F. Other Disclosures
F.3 Deed of Cross Guarantee
Under the terms of ASIC Corporations (Wholly owned Companies) Instrument 2016/785, certain wholly owned
controlled entities have been granted relief from the requirement to prepare audited financial reports. Quickstep
Holdings Limited has entered into an approved deed of indemnity for the cross-guarantee of liabilities with those
controlled entities in Note F.1.
The following consolidated Statement of Comprehensive Income and Balance Sheet comprise Quickstep Holdings
Limited and its controlled entities which are party to the Deed of Cross Guarantee (refer Note F.1), after eliminating
all transactions between parties to the Deed.
Statement of Profit and other Comprehensive Income
Revenue
Cost of goods sold
Gross Profit
Other expenses
Profit from operating activities
Net financing costs
Profit / (loss) before income tax
Income tax benefit
Profit/(Loss) for the year
Cash flow hedges
Total comprehensive income for the year
Balance Sheet
Assets
Current assets
Cash and cash equivalents
Term deposits
Trade and other receivables
Contract asset
Prepayments and other assets
Inventories
Total current assets
Non-current assets
Property, plant and equipment and software
Right-of-use asset
Goodwill
Investments
Deferred tax asset
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Deferred Income
Financial instruments
Loans and borrowings
Lease liabilities
Employee benefit obligations
Total current liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Employee benefit obligations
Total non-current liabilities
2023
$000
94,379
(84,473)
9,906
(12,871)
(2,965)
(2,924)
(5,889)
478
(5,411)
745
(4,666)
5,535
-
12,295
11,158
1,716
12,902
43,606
11,656
13,649
164
3,044
5,530
34,043
77,649
20,179
2,041
101
1,200
1,856
2,046
27,423
4,530
15,697
3,448
1,702
25,377
2022
$000
86,675
(73,192)
13,484
(12,585)
898
(1,979)
(1,081)
951
(130)
(575)
(705)
2,949
891
9,040
10,294
1,640
14,910
39,725
13,675
15,551
2,610
3,044
5,052
39,932
79,657
20,781
-
593
2,564
1,628
1,990
27,556
180
17,443
3,448
1,515
22,586
Quickstep Holdings Limited
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Notes to the Consolidated Financial Statements
for the year ended 30 June 2023
F. Other Disclosures
F.3 Deed of Cross Guarantee
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
F.4 Auditor’s Remuneration
Amounts received or due and receivable by the auditor KPMG for:
Audit services
Other services
Accounting and tax services
Total non-audit fee
2023
$000
52,800
24,849
120,785
7,721
(103,657)
24,849
2022
$000
50,142
29,515
120,785
6,976
(98,246)
29,515
2023
$
2022
$
288,130
245,000
-
-
288,130
-
-
245,000
F.5 Subsequent Events
Management have considered the matters or circumstances that have arisen since 30 June 2023 up to the date of this
report that would significantly affect:
•
•
•
the operations of the Consolidated Entity;
the results of those operations; and
the state of affairs of the Consolidated Entity.
No matter or circumstance has arisen since 30 June 2023 that has significantly affected the Group’s operations, results
or state of affairs, or may do so in future years.
F.6 New Accounting Standards Not Yet Adopted
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2023
reporting periods and have not been early adopted by the Group. These standards are not expected to have a material
impact on the entity in the current or future reporting periods
Quickstep Holdings Limited
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Directors’ Declaration
for the year ended 30 June 2023
In the Directors' opinion:
(a)
the consolidated financial statements and notes set out on pages 30 to 67 and the
Remuneration report on pages 21 to 28 in the Directors’ report, are in accordance with the
Corporations Act 2001, including:
i.
ii.
complying with Australian Accounting Standards and the Corporations Regulations
2001; and
giving a true and fair view of the Group’s financial position as at 30 June 2023 and
of its performance for the year ended on that date; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act
2001 from the chief executive officer and chief financial officer for the financial year ended 30 June
2023.
The directors confirm that the financial statements comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
There are reasonable grounds to believe that the Company and the Group entities identified in Note
F.1 will be able to meet any obligations or liabilities to which they are, or may become, subject to
by virtue of the Deed of Cross Guarantee between the Company and those Group entities pursuant
to ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
This declaration is made in accordance with a resolution of Directors.
Mr. M H Burgess
Director
25 August 2023
Sydney, New South Wales
Quickstep Holdings Limited
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Quickstep Holdings Limited
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Independent Auditor’s Report
To the shareholders of Quickstep Holdings Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Quickstep Holdings Limited (the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance with the
Corporations Act 2001, including:
giving a true and fair view of the Group’s
financial position as at 30 June 2023 and of
its financial performance for the year ended
on that date; and
complying with Australian Accounting
Standards and the Corporations Regulations
2001.
The Financial Report comprises:
Consolidated Balance Sheet as at 30 June
2023;
Consolidated Statement of profit or loss and
other comprehensive income, Consolidated
Statement of changes in equity, and
Consolidated Statement of cash flows for the
year then ended;
Notes including a summary of significant
accounting policies;
Directors’ Declaration.
The Group consists of the Company and the
entities it controlled at the year-end or from time
to time during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics
for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with these requirements.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
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Material uncertainty related to going concern
We draw attention to Note A, “Going Concern” in the Financial Report. The events or conditions
disclosed in Note A.2, indicate a material uncertainty exists that may cast significant doubt on the
Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and
discharge its liabilities in the normal course of business, and at the amounts stated in the Financial
Report. Our opinion is not modified in respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of
uncertainty regarding events or conditions casting significant doubt in the Group’s assessment of
going concern. Our approach to this involved:
Evaluating the feasibility, quantum and timing of the Group’s plans to manage business
performance and working capital to address going concern;
Assessing the Group’s cash flow forecasts for incorporation of the Group’s operations and plans
to address going concern, in particular in light of the recent history of loss making operations;
Determining the completeness of the Group’s going concern disclosures for the principal matters
casting significant doubt on the Group’s ability to continue as a going concern, the Group’s plans
to address these matters, and the material uncertainty.
Key Audit Matters
In addition to the matter described in the Material
uncertainty related to going concern section, we
have determined the matters described below to
be the Key Audit Matters:
Key Audit Matters are those matters that, in our
professional judgement, were of most
significance in our audit of the Financial Report of
the current period.
Revenue recognition;
Recognition of defered tax assets relating to
tax losses.
These matters were addressed in the context of
our audit of the Financial Report as a whole, and
in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Revenue recognition ($94,379,000)
Refer to Note B.1 ‘Key Performance Measures’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group generates revenue through sale of
goods to customers under contractual
arrangements and the Group’s policy is that
revenue is recognised over time, based on
performance completed to date for each
individual customer’s made to order parts.
Revenue recognition was a key audit matter
due to the quantum of the balance, and the
significant audit effort and judgment we have
applied in assessing the Group’s recognition
Our procedures included:
• Assessing the appropriateness of the Group’s
accounting policies related to revenue
recognition against the requirements of the
accounting standard and our understanding of
the business and industry practice;
• Reading a sample of executed customer
contracts to understand the key terms of the
arrangements and the performance obligations;
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY
72
and measurement of revenue. This was the
result of the:
• High volume of transactions within revenue
recognised from the sale of parts.
• Comparing the relevant features of a sample of
executed customer contracts to the criteria in the
accounting standard, those in the Group’s
policies, and against the Group’s identified
performance obligations;
• Complexity and judgements involved in
applying the requirements of AASB15
Revenue from Contracts with Customers.
• Obtaining an understanding of and testing key
internal controls over the Group’s accounting for
revenue from contracts with customers;
• Judgements made by the Group in the
• Testing a sample of revenue transactions
recognition and measurement of revenue over
time, based on performance completed to
date for each individual customer’s made to
order parts.
recognised for customer orders completed
during the year to customer purchase orders,
customer invoices, certificates of conformity and
customer signed dispatch dockets or other
signed evidence of delivery;
• Selecting a sample of pre and post year end
revenue transactions and assessing the
recognition of revenue in the period to underlying
certificates of conformity, customer signed
dispatch dockets, or other signed evidence of
delivery;
• Selecting a sample of transactions of customer
purchase orders in progress from the Group’s
Work in Progress Report and checked the labour
and materials performance completed to date to
underlying documentation, such as invoices and
timesheets, to assess the recognition of revenue
and the associated contract asset including the
allocated margin in accordance with the Group’s
revenue recognition policy;
• Evaluating the adequacy of disclosures in the
financial report using our understanding obtained
from our testing and against the requirements of
Australian Accounting Standards.
Recognition of deferred tax assets relating to tax losses $94,379,000
Refer to Note A ‘About this report’ and B.6 ‘Income Tax Benefit’ to the Financial Report
The key audit matter
How the matter was addressed in our audit
The recoverability of deferred tax assets (DTA)
related to tax losses is dependent on the ability
of the Group to generate sufficient taxable
income in the future to which the historical tax
losses can be applied.
This is a key audit matter due to the significant
judgement required by us to evaluate the
Our procedures included:
• Involving our tax specialists in assessing the
Group’s continuity of ownership assessment and
the tax loss availability for consistency with
regulatory parameters and legislation;
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Group’s assessment of their probability of
generating sufficient taxable profits, in light of
the tax losses recorded in the current and
previous financial years..
• Comparing forecast taxable income to historical
trends and performance to inform our evaluation
of the current taxable profit forecasts;
• Comparing the forecasts included in the Group’s
estimate of future taxable income used in the tax
loss utilisation model underpinning the DTA
recoverability assessment to those used in the
Group’s assessment of the going concern
assumption for consistency. We challenged the
differences between forecast cash flows used in
the Group’s assessment of the going concern
and taxable profits, by evaluating the adjustment
of cash flows for differences between
accounting profits and taxable profits, against
Australian tax law;
• Understanding the timing of future taxable
income and considering the consistency of the
timeframes of expected recovery to our
knowledge of the business and its plans;
• Evaluating the Group’s tax disclosures in the
financial report by comparing them to our
understanding of the tax matters affecting the
Group, and accounting standard requirements.
Other Information
Other Information is financial and non-financial information in Quickstep Holdings Limited’s annual
reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors
are responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’
Report. The Chair’s Report, CEO’s Report and other sections of the Annual Report before the
Directors’ Report are expected to be made available to us after the date of the Auditors’ Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not
and will not express an audit opinion or any form of assurance conclusion thereon, with the exception
of the Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
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Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or
error
assessing the Group and Company’s ability to continue as a going concern and whether the
use of the going concern basis of accounting is appropriate. This includes disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting
unless they either intend to liquidate the Group and Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
Auditor’s Report.
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FINANCIAL
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Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report of
Quickstep Holdings Limited for the year
ended 30 June 2023, complies with Section
300A of the Corporations Act 2001.
The Directors of the Company are responsible for
the preparation and presentation of the
Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report included
in pages 21 to 28 of the Directors’ report for the
year ended 30 June 2023.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted
in accordance with Australian Auditing Standards.
KPM_INI_01
KPMG
Cameron Slapp
Partner
Sydney
25 August 2023
STRONG LEADERSHIPBOARD OF DIRECTORSSHAREHOLDER INFORMATIONCORPORATE DIRECTORY 76
Shareholder Information
for the year ended 30 June 2023
The shareholder information set out below was applicable as at 4 October 2023.
A.
Voting rights
The voting rights attaching to each class of equity securities are set out below:
(a) On a show of hands every member present in person or by proxy shall have one vote and upon a poll each share
shall have one vote.
(b) Options do not carry any voting rights.
B.
Substantial holders
The sole substantial shareholder in the Company is Australian Super with 7,394,799 shares based on latest available
information.
C.
On Market buy back
There is no current on-market buy back.
D.
Distribution schedules
Distribution of each class of security as at 4 October 2023:
Ordinary fully paid shares
Range
Holders
Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - Over
Total
Performance Rights
1,102
1,898
598
842
80
5,520
641,452
4,967,467
4,571,778
25,478,036
36,067,481
71,726,214
Range
Holders
Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - Over
Total
E. Unmarketable parcels
-
-
-
-
4
4
-
-
-
-
2,340,534
2,340,534
%
0.89
6.93
6.37
35.52
50.28
100
%
-
-
-
-
100.00
100.00
Holdings less than a marketable parcel of ordinary shares (being $500 parcel at $0.23 per share):
Holders
2,011
Units
2,087,396
Quickstep Holdings Limited
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FINANCIAL
REPORT
SHAREHOLDER
INFORMATION
77
Shareholder Information
for the year ended 30 June 2023
F. Top holders
The 20 largest registered holders of each class of quoted security as at 4 October 2023 were:
Rank
1
Holder Name
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
Securities
7,394,799
%
10.31
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
17
17
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
DEAKIN UNIVERSITY
CARRIER INTERNATIONAL PTY LIMITED
SANDHURST TRUSTEES LTD
BNP PARIBAS NOMINEES PTY LTD
EXWERE INVESTMENTS PTY LTD
CITICORP NOMINEES PTY LIMITED
MR RENE ENJOLRAS
MR ANDREW JAMES VERCETTI
HOBSON COVE PTY LTD
EQUITY PLAN SERVICES PTY LTD
NETWEALTH INVESTMENTS LIMITED
YARRAANDOO PTY LTD
MR RONALD SMIT + MRS JULIE MARIE SMIT
MR WERN CHIAN TYE
MR DAVID CREIGHTON GELLATLY
MR FREDERICK JOSEF HAES + MRS JUDY ANNE HAES
REIGRAL PTY LTD
VCM INVESTMENTS PTY LTD
3,553,564
3,333,334
3,075,000
1,721,210
1,623,921
840,000
618,671
543,158
515,000
500,000
386,872
377,685
350,994
325,000
305,000
300,000
300,000
300,000
297,178
4.95
4.65
4.29
2.40
2.26
1.17
0.86
0.76
0.72
0.70
0.54
0.53
0.49
0.45
0.43
0.42
0.42
0.42
0.41
Total
26,661,386
37.17
Quickstep Holdings Limited
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78
CORPORATE
DIRECTORY
SHARE REGISTRY
Computershare Investor Services Pty Ltd
452 Johnston Street
Abbotsford, Victoria 3067
Telephone +61 3 9415 5000
STOCK EXCHANGE
Australian Securities Exchange Limited
Exchange Centre
20 Bridge Street
Sydney, New South Wales 2000
ASX CODE: QHL
For the year ended 30 June 2023
DIRECTORS
Mr. P Largier
Chair
Mr. M H Burgess
CEO and Managing Director
Mrs. L Heywood
Non-Executive Director
Mrs. E Mannes
Non-Executive Director
AVM K Osley (Ret’d)
Non-Executive Director
SECRETARY
Mr. C Roelofsz up to 11 September 2023
Mr. M Zlotnick from 11 September 2023
PRINCIPAL OFFICE
361 Milperra Road
Bankstown Airport
New South Wales 2200
Australia
Telephone: +61 2 9774 0300
Website: www.quickstep.com.au
Email: info@quickstep.com.au
REGISTERED OFFICE
361 Milperra Road
Bankstown Airport
New South Wales 2200
Australia
AUDITOR
KPMG
Chartered Accountants
Tower 3 / 300 Barangaroo Avenue
Sydney, New South Wales 2000
Australia
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